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Press Release
Palm Accelerates Mobile and Wireless Strategy With Acquisition of Extended Systems
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Strengthens Multiplatform Enterprise Solutions;
Creates Market-Focused Business Groups
EDITOR'S NOTE: The webcast, which will be held at 3 p.m. PST, can be
viewed at http://www.e-conference.com/palm/announcement_030601.
To listen to the announcement by telephone, please dial 877-677-0845 and
enter 9332 as the passcode. This feature will be available at 12 p.m. EST on
March 7, 2001.
SANTA CLARA, Calif., March 6 /PRNewswire/ -- Palm, Inc. (Nasdaq: PALM), a
leading provider of handheld computers, today executed on another leg of its
mobile and wireless strategy with a definitive agreement to acquire
Extended Systems Incorporated (Nasdaq: XTND), a leading mobile solutions
vendor in the enterprise space.
This strategy takes Palm beyond its traditional strength serving
individual users, to encompass enterprise solutions. Extended Systems'
product offerings represent the "glue" that binds the wealth of enterprise
applications with easy-to-use handheld computers, which can now be managed by
corporate information officers (CIOs).
Under the terms of the definitive agreement, Extended Systems'
stockholders will receive shares of Palm valued at $22 per Extended Systems'
share, subject to a collar described below. The transaction values
Extended Systems at approximately $264 million on a fully diluted basis.
Importantly, this acquisition will make Palm a unique vendor that can
provide both handheld computers and enterprise-class mobile infrastructure
software and support for multiple operating systems, including Palm OS,
Pocket PC, Windows CE, EPOC, and RIM. This comprehensive, behind-the-firewall
solution supports groupware and business applications -- enhancing overall
organizational productivity and controlling costs.
In a related move to sharpen customer focus, Palm created three strategic
business groups -- the Enterprise Solutions Group, the Individual Solutions
Group, and the Platform Solutions Group.
"Palm intends to be as popular with CIOs as it is with individuals," said
Carl Yankowski, Palm's chief executive officer. "Palm will be unmatched in
its ability to deliver information to individual users and large organizations
using a Palm solution or any mobile operating system or handheld device."
"Extended Systems and Palm share a vision and have complementary products
and culture. Together we significantly strengthen our ability to serve the
needs of the explosive enterprise market," said Extended Systems CEO,
Steve Simpson. "This move is a natural evolution as we join to create one
end-to-end solution from a single vendor. It's a win-win for customers,
employees and stockholders."
Extended Systems' prominence in the mobile enterprise market strengthens
Palm's position, and brings Palm the opportunity to enhance its handheld
device business, and, for the first time, sell mobile infrastructure software,
services and support. Noted analysts project that the server sync segment of
the enterprise market alone could exceed $1 billion by 2003.(1) These new
revenue sources also provide high margin business opportunities for Palm.
In addition to Extended Systems' mobile data management and Bluetooth
wireless connectivity products, the acquisition will provide Palm with a
strong engineering staff experienced in the enterprise market, as well as a
worldwide sales force, strategic partners, and a large installed base of
enterprise customers -- including British Airways, International Paper
Company, Cadbury Schweppes, Daimler Chrysler, and Orange.
Under the terms of the agreement, Extended Systems' stockholders will
receive a number of Palm shares based on the average closing price for Palm
for the 10 trading days ending two business days prior to the
Extended Systems' stockholders' meeting. If the average closing price of Palm
stock is between $16.60 and $22.00 per share, Extended Systems' stockholders
will receive a number of shares equal to $22.00 per share divided by the Palm
average closing price. If the average price is at or above $22.00,
Extended Systems' stockholders will receive one Palm share for each
Extended Systems' share; if the average price is at or below $16.60,
Extended Systems' stockholders will receive 1.325 Palm shares for each
Extended Systems' share. Palm will account for this transaction using the
purchase method of accounting. The transaction is subject to regulatory and
Extended Systems stockholder approvals, and is expected to close in June 2001.
Benefits to Stakeholders
The acquisition of Extended Systems provides Palm with key assets that
advance Palm's enterprise leadership goals. Palm believes its ability to
provide CIOs with an end-to-end mobile services infrastructure will accelerate
the rate of enterprise adoption.
Extended Systems gains critical value-add elements for its enterprise
customers -- including applications, devices and mobile and wireless
expertise. Extended Systems also benefits from Palm's deeper relationships
with alliance partners, brand strength, marketing power, and financial
resources. Together, the companies can deliver a single, comprehensive
solution for the enterprise. This will simplify work for CIOs by providing
them with widely used tools to deliver mobile and wireless access to the
multitude of handheld devices -- of any type -- in their organizations.
Palm's strategic partners and the more than 145,000 registered developers
that support the Palm Economy will benefit from Palm's increased focus on
large organizations. Palm plans to extend the Palm platform and establish a
new set of APIs for behind-the-firewall enterprise services.
Individuals who use their Palm handheld devices at home and work will
benefit from more services and applications, as broad synchronization and
infrastructure standards spread from enterprises to ISPs and portal providers.
Extended Systems, based in Boise, Idaho, employs approximately
380 individuals worldwide. For the second quarter ended
December 31, 2000, Extended Systems reported revenue of $13.9 million and a
net loss of $1.6 million or $0.15 per share. Revenue from mobile information
management (MIM) software for the second quarter was $6.4 million, an increase
of 69 percent over MIM software revenue in the same quarter of the prior year.
Extended Systems is a leader in data synchronization and management and
wireless connectivity technologies. Extended Systems and Palm are active
members of the Bluetooth SIG. Extended Systems has licensed Bluetooth software
to leading mobile device manufacturers including Palm, 3Com, Motorola,
Hewlett-Packard Company, Fujitsu and Xircom. Currently, Extended Systems has
Internet and print server businesses; however, Extended Systems plans to exit
those businesses and focus on the enterprise technology solutions previously
described.
Strategic Business Groups Increase Customer Focus
To better embrace the much larger enterprise team gained through the
acquisition, and focus the appropriate resources on all its customers, Palm
has aligned its organization's structure around three new business groups,
effective immediately.
The Palm Enterprise Solutions Group (ESG), which will incorporate most
Extended Systems employees as well as Palm's current Enterprise Market Segment
organization, led by Jerry Jalaba, will be managed by Extended Systems
President Steve Simpson, as general manager when the transaction closes.
Until that time, Jalaba will continue in his current role in Palm Enterprise
management. ESG will be responsible for all Palm's enterprise solutions,
including the new mobile services infrastructure business.
The Palm Individual Solutions Group (ISG) includes Palm's primary
solutions (handheld devices, content, and mobile and wireless access). It is
responsible for Palm's handheld products for individuals, such as consumers,
students, and other professionals. Palm's Chief Marketing Officer Satjiv
Chahil leads this group until a permanent general manager is named.
The Palm Platform Solutions Group (PSG) is being managed by Alan Kessler,
who already has responsibility for the Palm OS, licensing and partnerships.
He becomes the unit's general manager.
Barry Cottle, who successfully created and incubated Palm's Content and
Access, business becomes Palm's Chief Internet (Net) Officer (CNO),
responsible for Internet alliances, reporting directly to Yankowski. He is
also responsible for all ISG marketing, reporting to Chahil.
"The acquisition of Extended Systems lets us fine-tune our organizational
structure around a total solutions approach that focuses on customers," said
Yankowski. "This structure will enhance how we interact with all of our
customers, and dramatically improve our ability to execute on our mobile and
wireless strategy."
Palm in the Enterprise
Historically, Palm handhelds have been embraced by employees bringing
their devices into the work environment. According to Palm's customer
surveys, more than 40 percent of Palm handheld units are paid for or
reimbursed by companies; and 80 percent of Palm handhelds are synced at work.
Hundreds of companies have approved Palm handhelds on their standards lists
-- 140 of which are among the U.S.'s Fortune 500. According to IDC analysts,
less than 10 percent of the devices are being deployed to enterprises by a
centralized organization. But these analysts estimate that the "company
deployed" segment of the market will grow significantly faster than the
overall handheld market by 2003.
Having shipped more than 11 million devices, Palm is the leading provider
of handheld computers. In the first half of 2000, IDC credits Palm with
68 percent worldwide market share of "personal companions."(2)
Additional Information and Where to Find It
In connection with the proposed transaction, Palm will file a registration
statement on Form S-4, including a proxy statement-prospectus, with the
Securities and Exchange Commission. Investors and security holders are
advised to read the registration statement, including the proxy
statement-prospectus, when they become available because they will contain
important information about the proposed merger. Investors should read the
proxy statement/prospectus before making any voting or investment decisions.
Investors and security holders may obtain a free copy of the registration
statement and the proxy statement-prospectus (when available) and other
documents filed by Palm with the Securities and Exchange Commission at the
Securities and Exchange Commission's website at http://www.sec.gov. Free
copies of the registration statement (when available) and other documents
filed by Palm with the Securities and Exchange Commission may also be obtained
from Palm.
Extended Systems and its directors and executive officers may be deemed to
be participants in the solicitation of proxies from Extended Systems
stockholders in favor of the proposed transaction. Information regarding the
interests of the officers and directors of Extended Systems in the proposed
merger will be set forth in the proxy-statement prospectus, when available.
In addition, information regarding such officers and directors is included in
Extended Systems' Proxy Statement for its 2000 Annual Meeting of Stockholders
filed with the Securities and Exchange Commission on September 20, 2000. This
document is available free of charge at the Securities and Exchange
Commission's website at http://www.sec.gov and from Extended Systems.
About Extended Systems
Extended Systems is a leading provider of mobile information management
solutions that enable users to access, collect, synchronize, and print
information on demand. The company's products include data synchronization
and management software, short-range wireless connectivity products (Bluetooth
and IrDA-compliant), and client/server database management systems with remote
access capabilities. Extended Systems' customers and key relationships
include 3Com, Palm, IBM, Intel, Microsoft, Compaq, Motorola, Ericsson,
Hewlett-Packard, Agilent, Sharp, NEC, and Toshiba.
Founded in 1984, Extended Systems has offices and subsidiaries in the
United States and worldwide. For more information, visit the company website
at http://www.extendedsystems.com.
About Palm, Inc.
Palm, Inc. is a pioneer in the field of mobile and mobile and wireless
Internet solutions and a leading provider of handheld computers, according to
IDC(2). Based on the Palm OS(R) platform, Palm's handheld solutions allow
people to carry and access their most critical information with them wherever
they go. Palm(TM) handhelds address the needs of individuals, enterprises and
educational institutions through thousands of application solutions.
The Palm OS platform is also the foundation for products from Palm's
licensees and strategic partners, such as Franklin Covey, Handspring, IBM,
Kyocera, Sony, Symbol Technologies, and TRG. Platform licensees also include
Nokia and Samsung. The Palm Economy is a growing global community of
industry-leading licensees, world-class OEM customers, and more than
145,000 innovative developers and solution providers that have registered to
develop solutions based on the Palm OS platform. Palm went public on
March 2, 2000. Its stock is traded on the Nasdaq national market under the
symbol PALM. More information is available at http://www.palm.com.
(1) Wireless Data -- In Sync, Robertson Stephens, December 28,2000
(2) "Battle at Hand: The Smart Handheld Devices Market Forecast and
Analysis 2000 - 2004," December 2000.
NOTE: Palm OS is a registered trademark and Palm is a trademark of
Palm, Inc. or its subsidiaries.
This press release contains forward-looking statements about the impact of
Palm's acquisition of Extended Systems. These statements are subject to many
risks and uncertainties, including regulatory review and approval of the
transaction, approval by the Extended Systems stockholders, the need for the
company to successfully integrate Extended Systems' employees, products and
operations, the need for the combined company to successfully develop new
products and services, and the demand for mobile and wireless products.
Additional risks will be set forth in a Registration Statement on Form S-4, to
be filed with the SEC in connection with this transaction in the coming weeks.
SOURCE Palm, Inc.
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