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A anonymous tipster tells us Palm will lay off 250 employees, confirming our previous report. "The biggest cuts are from OS development," our source says. "[SVP Mark] Bercow wants the OS sold by April or worst case scenario — abandoned." Which seems strange, considering Palm went through some gymnastics just to get is old operating system back from the Japanese company, Access, which had bought it. The rumor, however, jibes with the Wall Street Journal's report last week on former Apple exec and current Palm executive chairman Jon Rubinstein's plans for the company.

Sources told the Journal Rubinstein plans to develop a new Linux-based software platform to run apps on all of Palm's devices before the end of next year. And Rubinstein seems comfortable with addition by subtraction. The Journal says he "cleaned house" within a month of his arrival last summer. Still, the timing is tough for Palm engineers. "What a holiday gift," our source writes. "We're supposed to be told about severance tomorrow."