Palm buys assets of multimedia OS developer

Handheld computer maker Palm Inc. Thursday said it plans to acquire the intellectual property and technology assets of multimedia operating system developer Be Inc., in a deal meant to boost the new stand-alone software unit that Palm announced last month.

Santa Clara, Calif.-based Palm also disclosed today that Alan Kessler is resigning from his job as general manager of the software-oriented Platform Solutions Group, effective tomorrow. Eric Benhamou, the chairman of Palm's board of directors, was named acting CEO of the software operations until a permanent replacement for Kessler is found.

The purchase of Be's assets is a stock-swap deal valued at about US$11 million, according to Palm. In addition to buying the Menlo Park, Calif.-based company's assets, Palm also is offering jobs to Be's engineering team. Palm CEO Carl Yankowski said in a statement that the deal is aimed at adding multimedia and Internet capabilities to the Palm OS operating system.

Be CEO Jean-Louis Gassee will work with Palm on a temporary basis to assist in both the integration of Be's technology and the planned separation of Palm's hardware and software businesses. Meanwhile, Be said in a separate announcement that it plans to sell off the Palm stock and end its operations after the deal is completed in the fourth quarter.

The sell-off agreement comes just two weeks after Be cut its workforce by 33 percent, laying off 28 employees in a move that included the elimination of its sales and marketing departments. That in turn followed a $3.9 million second-quarter loss on sales of just $715,000 and the April hiring of an investment banking firm to help Be explore a possible sale and other financial alternatives.

Palm announced in late July that it was separating the Platform Solutions Group from its hardware business in order to "foster the independence" of both units.

In disclosing his plans to leave the software operation, Kessler today said he had decided "to move on to a new challenge."

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