PalmSource chief steps down

David Nagel resigns following a series of executive changes in the past several months at the struggling maker of the Palm OS.

Dawn Kawamoto Former Staff writer, CNET News
Dawn Kawamoto covered enterprise security and financial news relating to technology for CNET News.
Dawn Kawamoto
3 min read
David Nagel has resigned as PalmSource chief executive, president and director, a move that follows a series of executive changes in the past several months at the struggling maker of the Palm handheld operating system.

David Nagel

Nagel, who resigned as of Sunday, has been replaced by Patrick McVeigh, PalmSource senior vice president of worldwide licensing and sales.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 as 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 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.

"Dave was not respected on Wall Street," said Jamie Friedman of Fulcrum Global Partners. "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.

"Pat has helped stabilize revenues and expand their licensing," Friedman said. "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 also 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 its latest quarter, PalmSource met Wall Street's expectations and, more important, was in line with analysts' forecasts for the current quarter. PalmSource had previously been meeting Wall Street expectations for the quarter but would then issue guidance on the current quarter that was below analyst forecasts, Friedman said.

The company's stock has been in decline since it went public in April last year.

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.

"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," Gassee said in a statement Monday.

Before joining the combined Palm, Nagel served as AT&T's chief technology officer and had a history of working in technology areas rather than business operations. Nagel also previously served as a senior vice president at Apple Computer and led its global research and development group. Nagel spearheaded Apple's ill-fated Copland operating system project, one of the computer maker's first efforts at its next-generation OS before its eventual release of Mac OS X.

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

In related news, PalmSource's developer conference runs Tuesday through Thursday in San Jose, Calif.