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PalmSource CEO bows out
"Shame on them for not executing"

By Dawn Kawamoto

Published: Tuesday 24 May 2005

David Nagel has resigned as PalmSource chief executive, president and director, a move that follows a series of executive changes in the past few months at the struggling maker of the Palm handheld operating system.

Nagel, who resigned as of Sunday, has been replaced by Patrick McVeigh, PalmSource senior vice-president of worldwide licensing and sales. McVeigh will serve as interim CEO while the company initiates a search for a permanent replacement. Nagel will remain as a company adviser through mid-July to help with the transition, PalmSource said on Monday.

The company declined to comment on the reasons behind Nagel's resignation but one analyst said he believes it was based on PalmSource's performance.

Jamie Friedman of Fulcrum Global Partners said: "Dave was not respected on Wall Street. Software on phones is at a very early stage and I think PalmSource can do a better job in the future than it has in the past. They're in a good market, so shame on them for not executing."

Friedman noted, however, that two recent executive changes at PalmSource have resulted in significant improvements at the company.

McVeigh joined the company in February after having served as chief executive at Aliph, a developer of next-generation audio and speech technologies for mobile communications devices. McVeigh also previously oversaw worldwide marketing, sales and operations for Palm, which in October 2003 separated its PalmSource OS division from its hardware division, which later became PalmOne.

Friedman said: "Pat has helped stabilise revenues and expand their licensing. Nagel was focused on the PDA market and not on the feature phone market until recently. They're now focused on the feature phone market but maybe he didn't move fast enough for PalmSource's board."

PalmSource named Jeanne Seeley as its new chief financial officer in late February, replacing Al Wood, who left late last year. In November, the company also appointed a new chairman, Jean-Louis Gassee, a general partner with venture capital firm Allegis Capital. Gassee replaced Eric Benhamou, who continued as chairman of PalmOne.

In a statement on Monday Gassee said: "I want to thank Dave for playing an instrumental role in helping position PalmSource to be a major player in the worldwide mobile software market."

Nagel, who previously served as a director of Palm when it included both the OS and hardware divisions, was named head of the company's OS subsidiary in 2001. Despite Palm's efforts to grow its licensing business and make competing hardware vendors feel comfortable using Palm's OS, however, the spin-off of PalmSource never attracted as many licensees as anticipated.

A company representative said the board has started its search for Nagel's replacement and declined to comment further on those efforts.

Dawn Kawamoto writes for CNET News.com