Bono Could Lose 460 Million Dollars

Tweet

Image via CrunchBase

Source: U2station.com
By Jonathan on April 21, 2010 8:37 AM 

Laureate BVI says, Bono of U2 may lose $460 million (€340m) on Investment in Palm (PALM)

By Jonathan on April 21, 2010 8:37 AM | No Comments | No TrackBacks ShareThis

The future of Palm (PALM) looks bleak and U2 lead singer Bono investor in Elevation Partners may lose $460 million (€340m) on deal.

NEW YORK (Laureate BVI) -- Elevation, a private equity firm that includes U2 lead singer Bono among its partners, has made three more investments in Palm since its initial deal, buying common stock, convertible preferred shares and warrants worth about $460 million (€340m).

Elevation, which now controls roughly 30 percent of Palm, has stood by the smartphone maker, even as other shareholders bailed and analysts warned its days as an independent company may be numbered.

Palm's future has not looked good since the launch of the iPhone. But after reporting worse than expected results for the third quarter last week Thursday, some analysts think the company's stock is now essentially worthless. Three analysts even lowered their price targets to $0.

Shares of Palm (PALM) plunged 19% to $4.59 a share early last week, a new 52-week low. Investors are becoming increasingly pessimistic about the company's future and several analysts downgraded their positions on the stock to "sell." Palm has struggled to make a dent in the smartphone market. Apple's (AAPL) iPhone and Research in Motion's (RIMM) BlackBerry are far more popular. Competitors Nokia (NOK) and Motorola (MOT) have also had more success in the market.

Peter Tasca, CEO of Laureate BVI fund says, "What I find most troubling about the future of Palm is the departure of Michael Abbott, the Senior Vice President who was responsible for their WebOs operating system. Mr. Abbott was granted 400,000 options on Palm stock two years ago with a strike price of $5.75. When one of your top executives potentially leaves money on the table, that is not a good sign."

In an attempt to reassure investors worried about the company's financial situation, Palm announced in February that it had $500 million in cash on hand. But analysts expect this buffer to soon be lost given the pace at which the company is burning its money in its attempts to pick up flagging sales.

Canaccord Adams analyst Peter Misek who also lowered Palm's price target to $0 Friday, wrote in a report that "Palm's troubles will only accelerate as carriers and suppliers increasingly question the company's solvency and withdraw their support."

Tasca added that he thinks Palm's current cash level can only keep the company afloat for about another 12 months.

Palm was not immediately available for comment about the analysts' downgrades and questions about its cash position.

© 2010 Pr-Inside.com

Related articles by Zemanta

• Palm running out of options (money.cnn.com)
• Palm stock soars on takeover talk (money.cnn.com)
• Palm Shake-Up Imminent, Rubinstein May Be Out (techcrunch.com)
• Palm's new price target: $0 (money.cnn.com)
• Palm Under Pressure After Shortfall (businessweek.com)

Is Bono the worst investor in America?

Tweet

Image by Richard Cawood via Flickr

Found this story on Irish Central.com

U2's Bono called the worst investor in America

By 

DARA KELLY

 , 

IrishCentral.com Staff Writer

Bono, the Irish rock star, is being hailed as "the worst investor in America" as his five person investment team Elevation Partners reels from a series of unprofitable investments. It's believed that the rocker has lost millions by investing with Elevation, although a precise figure has yet to be released. What's certain is that the U2 front man has put significant money into Elevation, which investment trade papers are calling arguably the worst run institutional fund of any size in the United States.

Bono is listed as one of the five members of the firm’s investment team, and their fund claims that its “mission is to help media and entertainment businesses develop and market great content.” But in the process it has made an unprecedented string of disastrous investments which, observers say, even bad luck could not explain. The most well-known of the Elevation investments is in Palm, which made an unsuccessful stab at the smartphone business dominated by Apple's iPhone, and handsets powered by the Google mobile operating system known as Android. Investors had hoped that Palm’s new line of Pre handsets would allow the company to be a modest competitor in the smart phone industry but instead it has spent massive amounts for very slim returns and remains in trouble as it tries to reach even fairly modest sales goals.

Elevation was recently quoted in Reuters saying that it still has faith in Palm, a company in which it bought a 25% stake in 2007. It is astonishing, say Wall Street observers, that Elevation would publicly say it still has faith in a company which is close to non-existence. Whitney Tilson, managing partner of T2 Partners, a New York-based hedge fund, recently told MarketWatch in reference to Palm, “There is a 90% chance that they go bankrupt or get acquired within a year.”

Related articles by Zemanta

• Bono Named Worst Investor (Palm) (benzinga.com)
• Elevation invests in Yelp, up to $100 million (news.cnet.com)
• Don't Trust Bono With Your Money (nymag.com)
• Bono Becomes The Worst Investor In America (247wallst.com)
• Yelp Gets Up to $100 Million From Elevation Partners (businessweek.com)