Things are not going particularly well over at PalmSource (NASDAQ:PSRC), the ugly sibling of tech star palmOne (NASDAQ:PLMO), both of which were spun off from Palm Pilot maker Palm in 2003.
With all the palms mentioned in that paragraph, you'd think that somebody here would start clapping. But the news released after market close yesterday was that the palms were waving goodbye; this time, to PalmSource Chief Financial Officer Al Wood. As is standard for departures of high-level executives, PalmSource said Wood wanted to "pursue other interests." It's a statement so vague as to be meaningless, and with most companies that issue it, you don't see the true meaning until the subsequent announcement of a Securities and Exchange Commission investigation, an earnings restatement, or similar disheartening news.
In PalmSource's case, I wouldn't necessarily expect any of the above, though. Generally, when a company is forced to restate earnings and is being investigated by the SEC, it's because it has overstated profits. PalmSource, however, has no profits. And it's hard to restate something that isn't there.
So it's more likely that Wood is simply tired of being the guy in charge of reporting the bad numbers generated by a company in the dire financial and competitive straits that PalmSource is in. PalmSource's fraternal twin, palmOne, is moving to diversify its product line with products that do not use PalmSource's operating system. Major client Sony (NYSE:SNE) is phasing out production of its Clie PDA (which uses/used PalmSource's OS). And at the same time that PalmSource finds itself in need of new clients among "smartphone" makers to shore up its revenue stream, Symbian's hold over this market is strengthening (incidentally, Symbian is part-owned by Sony and its partner in cell-phone making, Ericsson (NASDAQ:ERICY)). While PalmSource has recently had some success in this market despite Symbian's dominance, it's going to be tough going now that software titanMicrosoft (NASDAQ:MSFT) is also trying to break in, bringing partner Motorola (NYSE:MOT) along with it.
PalmSource's situation was well illustrated in its latest earnings release. While its fiscal first quarter was not terrible, the current quarter is expected to underperform analyst expectations, with profits as likely as losses, and the most probable result being break-even numbers.
Prospects like that can drive anyone, even a CFO, to "pursue" an interest in working for some other company, and preferably for one that has a better chance of making a profit.
For more on PalmSource and its sibling, read:
Fool contributor Rich Smith has no position in any company mentioned in this article.
