PalmSource recently announced plans to acquire China MobileSoft in an all-stock deal to expand presence in the Chinese market. Under the deal, PalmSource will give MobileSoft approximately 1.6 million shares, valued at US$20 million, for the Chinese company's outstanding equity and rights.

 

The transaction, expected to conclude by the end of February 2005, is considered by PalmSource as an important step toward strengthening its R&D capabilities and increasing its portfolio of mobile phone licensees in China. PlamSource also plans to take on around 150 research personnel from the Nanjing-based company.

 

MobileSoft, a wholly-owned subsidiary of MobileSoft Technology, has been engaged in developing OS (Operating System) for Smartphones and feature phones. PalmSource said it will continue with the Chinese company's development of Linux-based OS for handsets.

 

The acquisition comes as possible relief for PalmSource, which has experienced a couple of setbacks in 2004. Sony's earlier decision to exit the PDA (Personal Digital Assistant) market in the US suggests a likely dent in the revenue performance of PalmSource, who saw Sony as its major licensee. Additionally, its chief financial executive resigned unexpectedly last week.