Bono hands over $100 million to iPhone rival Palm

What has Steve Jobs ever done to Bono?

Elevation Partners , a venture capital firm co-founded by U2 lead singer Bono who is also known for his charitable works and fellow rocker Roger McNamee announced Monday that it will provide a $100 million to struggling smart phone maker Palm.

The much needed capital infusion, could lift the company from its sagging fortunes and bolster its efforts to provide consumers with a credible alternative to the top selling iPhone produced by Apple.

Under terms of the agreement, Elevation Partners will provide US$100 million and increase its investment in Palm.

The investment comes at a time when Palm is struggling to remain a player in the mobile phone market, where it has been eclipsed by rivals Research In Motion and Apple. Palm’s product offerings include the Centro and Treo smartphones.

“The additional capital from Elevation Partners will enable us to put added momentum behind the new product introductions scheduled for 2009 and will provide us with enhanced stability in unsettled economic times,” Ed Colligan, Palm’s CEO, said in a statement.

Colligan acknowledged that the company was working through an “undeniably difficult period,” in a statement last week when announcing the company’s second-quarter financial results.

Palm reported revenue of $191.6 million for the second quarter ending Nov. 30, down from $349.6 million it reported a year earlier. The company sold 599,000 smartphones in the quarter, down 13 percent from a year earlier, while revenue from smartphones saw a 39 percent drop.

The company may continue to struggle through next year as sales are expected to slow down. IDC last week said mobile phone shipments would decline by more than 2 percent next year compared to 2008. That is the largest decline since 2001, IDC said, noting that the global economic crisis was a major factor in the drop.

Palm will reportedly introduce new smartphones and a new Linux-based operating system for mobile devices, code-named Nova, next year.

Under terms of agreement, Elevation will pay $3.25 per share, a 31 percent premium on last Friday’s closing prices of Palm’s stock. The deal is expected to close by the end of January.

Back in June of 2007, Palm announced a strategic stock sale to Elevation Partners, a five way partnership between Bono, Apple iPod pioneer Jon Rubinstein, and three other executives including former Apple CFO Fred Anderson.

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