Palm, one of the earliest and most influential PDA developers, has been struggling to stay afloat until the official release of its much-anticipated Pre smartphone for Sprint. In a surprising move, the company has announced that it will be releasing 18.5 million shares of its common stock onto the market.

Until now these shares had been secured to a prior investment made by Elevation Partners. The $105 million proceeds from the sale of the stock will first be used to pay off the $49 million owed to Elevations Partners while the remaining funds will go back to Palm to help fatten up its cash position in these tough economic times.

This latest development comes at a time when Palm is readying final preparations on its Pre for sale on the Sprint network by the end of the second quarter. Palm's investors remain extremely optimistic about the Pre's chance for success in a flooded market, however. In fact Roger McNamee, one of the cofounders of the investment firm Elevation Partners maintains that the Pre will offer serious competition to Apple's iPhone and RIM's Blackberry line.