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Palm, Inc. plans to close all but one of its nearly three-dozen retail stores, the company announced yesterday. It has also settled a class-action lawsuit filed by owners of the Treo 600 and 650 smartphones.

The store closes and settlement are the latest in a string of bad news for the struggling smartphone-maker. Last year, Palm laid off 10 percent of its workforce and took a huge financial hit with the withdrawal of the Folio smartphone companion on the eve of its planned release.

Store Closings
Palm launched the first of its retail locations back in 2002 and the last one in December 2006 at New York City's Rockefeller Center.

Of Palm's 34 stores, 26 are located in airports, with the rest setup as standalone locations, mostly in malls across the country. The only store slated to survive this purge is the one at Palm's Sunnyvale headquarters.

The shuttering of its self-branded stores is the latest move by struggling smartphone maker to reduce costs and, according to the company, to focus on its smartphone business.

"We continue to focus our company around core business initiatives and are consolidating more resources behind fewer programs in order to compete most effectively," Palm said in a statement yesterday.

This statement echoes the period of transition Palm president and CEO Ed Colligan emphasized when commenting on the company's less than stellar results for its most-recent financial quarter last month.

"We are transforming Palm to exploit the market opportunity and instilling operational rigor throughout the organization,” according to Colligan. "We've taken actions to align our expenses to the current operating environment and are focusing on core initiatives that will have the greatest impact on achieving our long-term success."

Treo Settlement
Filed in 2005, plaintiffs in the Treo 600/650 suit asserted these models failed, requiring either fixing or replacement, way more than they should have. Palm is settling to avoid a costly court battle.

Those who bought their Treo 600 or 650 between September 30, 2005 and a half year after the settlement is finalized (a hearing is scheduled for May 2nd) are entitled to cash rebates on a new Palm device, $75 for Treo 600 users and $50 for owners of the Treo 650.

One caveat: only those who had to get their Treo 600 or 650 fixed or replaced two times or more are eligible. If you don't fall into that group, and your warranty has expired, Palm will fix your Treo free of charge.

As of noon, Palm's stock has fallen by close to 3 percent on news of the store closings and settlement. It is currently valued at $4.86 per share.

Palm received an influx of much needed cash, $325 million, through a partial buyout by private-equity firm Elevation Partners, which gained a 27 percent stake in the company.

And, perhaps, most importantly, it'll be lead in its transformation by a new Chairman, Jon Rubinstein, who is a former senior vice president of hardware engineering and head of the iPod division at Apple. He is also now Palm head of product development.