The holiday season came right on time for Palm, which today announced a $100 million investment from Elevation Partners.

The influx of cash aims to help the troubled handset manufacturer shore up its operations and deliver new products. It also marks the second equity investment by Elevation Partners, which poured $325 million into Palm's coffers in June 2007.

"The additional capital will enable us to put added momentum behind the new product introductions scheduled for 2009 and provide us with enhanced stability in unsettled economic times," Ed Colligan, Palm's president and CEO, said in a statement.

Through the deal with Elevation, the VC firm will pay $3.25 per share, a 31 percent premium on Palm's closing price last Friday. Following its latest investment, Elevation Partners becomes Palm's largest shareholder, owning about 41 percent of the company, according to Lyn Fox, Palm's vice president of corporate communications.

News of the transaction sent Palm's stock price soaring to a peak of $3.68 per share late this morning, up more than 47 percent. At press time, shares of Palm had slipped back to $2.98 -- still up 20 percent.

The investment couldn't come at a better time for Palm, which is struggling to gain traction in the high-stakes mobile device market -- currently dominated by the likes of Nokia, Blackberry maker Research in Motion and newcomers like Apple, with its iPhone. According to a December Gartner report, Palm held 2.1 market share in smartphone sales for the third quarter of 2008.

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