PalmSource's stock tumbled last week with news of net revenue losses and reductions in the number of devices shipped by licensees.

The company attempted to counter these bad tidings with word from interim CEO Patrick McVeigh of a new unnamed 'Tier 1' licensee. Today, PalmSource announced last week’s mystery vendor is in fact ... LG Electronics.

The Korean electronics giant signed an agreement with PalmSource to license the Palm OS to build and distribute smartphones worldwide. LG executive VP Skott Ahn said the manufacturer went with the Palm platform because of its adaptability and capabilities.

"The flexible, open and powerful nature of Palm OS is an ideal match for our industry leading mobile handsets. We believe our customers will appreciate the new Palm Powered phones we will develop and distribute," exclaimed Ahn.

LG did not indicate when it would first ship a Palm-based smartphone. Nor did it say if the devices in question would feature PalmSource’s current Palm OS Garnet, missing in action Cobalt, or next year's Linux edition of the platform.

Signing LG could help PalmSource dig its way out of the red, as it might counteract the blow the company took when number two licensee (many would assert number one innovator) Sony stopped shipping handhelds last year.

And since the rising smartphone market is the wave of the future, inking deals with companies like LG—committed to those types of devices rather than PDAs—could be PalmSource's future meal ticket.

For example, Canalys reported in April that the worldwide market for smart mobile devices (PDAs & smartphones) grew 82 percent during the first quarter of 2005 compared to the same period a year earlier.

You can attribute all of that growth to a 137 percent increase in smartphone shipments. The number of PDAs to hit store shelves, by comparison, decreased by 6 percent.

The smartphone centric Symbian platform dominated with 61.4 percent of the market, as manufacturers shipped three times as many Symbian devices year-over-year. Microsoft's Windows Mobile platform dropped to 18.3 percent from 23.1 percent, but increased product shipments by 44 percent over first quarter 2004.

PalmSource's Palm platform saw a massive reduction in share, however, going from 22 percent to 10.5 percent of the smart device market.

Although licensee palmOne's Treo series accounted for 80 percent of smartphone sales the U.S., for example, the device's impact in the EMEA & Asia/Pacific regions—where smartphones are far more common—was negligible.