Has Palm run out of Apple engineers to poach? Or has Steve Jobs's intimidation campaign proven effective? Whatever the reason, Palm's latest hire seems smart: Matias Duarte, the designer of the user interface for the Sidekick and Helio's Ocean.

Virgin Mobile will acquire failed mobile virtual network operator Helio for $39 million in equity and, if the last two years are a trend, much more in costs. Founded as a joint venture between Earthlink and SK Telecom, Helio burned through $560 million in its first two years. [PaidContent]

Helio backer SK Telecom, the Korean wireless giant, is in negotiations to purchase Virgin Mobile USA. The plan: combine the two properties and then invest enough in Sprint Nextel to get all three companies working together. Sprint already runs the network over which Helio and Virgin run their cell-phone services. Complicating the deal: T-Mobile's rumored interest in buying Sprint. "Part of something is better than all of nothing," a source close to Helio tells us.

SK Telecom, the backer of money-losing wireless startup Helio, could buy out Virgin Mobile USA and combine it with Helio. [MocoNews.net]

Rolla Huff, the CEO of Internet service provider EarthLink, has made a choice many in Silicon Valley find incomprehensible: He's no longer bothering to get new customers. Here, the moment you stop growing — no, the very second your momentum falters — you're instantly written off. But the reason why EarthLink swung to a $54 million profit in its first quarter was simple. Its new dial-up customers — yes, people are still signing up for dial-up — simply weren't worth its while, and EarthLink stopped spending money to market service to them. Huff has also pulled the company out of the municipal Wi-Fi market, selling some networks to city governments and shuttering others. He's similarly disentangling the company from its Helio cell-phone joint venture, a half-billion-dollar fiasco. All of that doesn't leave EarthLink with much of a future.

Helio has tapped Goldman Sachs, its longtime banker, for a new project, we hear. Signing up a banker is usually a sign that a company is putting itself up for sale. Helio, Sky Dayton's wireless startup, began life as a joint venture of EarthLink and SK Telecom, the South Korean phone company. But EarthLink washed its hands of Helio after the untimely death of CEO Garry Betty, and on Tuesday, Dayton and most of his EarthLink-loyalist management team were ousted. Now SK, too, may be looking for Goldman to rid it of a cash-burning child. Why would anyone buy Helio? Not for its tiny user base. Possibly for its innovative phone designs, like the Ocean, and mobile friend-finding services. It is unlikely those will reclaim the hundreds of millions of dollars SK poured into Dayton's dream.

Helio CFO Todd Tappin and execs Michael Zemetra, Terry Boyle and Kieran Hannon will leave the company by March 31. A source tells us former CEO and current chairman Sky Dayton won't remain long, either. The cell-phone carrier started as a joint venture in 2006 between EarthLink, the Internet service provider founded by Dayton, and South Korean phone company SK Telecom. Since then, it has disappointed, and EarthLink ran short on cash to invest. When SK Telecom reupped with another $270 million last fall, reducing EarthLink's share to 22 percent, this kind of shakeout was expected. In fact, our source tells us most if not all executives from the "EarthLink side of the house" will depart the company on or before March 31.

CAMBRIDGE, MASS. — Could it be that Sky Dayton is feeling a little lonely? EarthLink, the company he founded, refused to participate in the latest round of financing for Helio, the upstart wireless carrier he now heads. In a keynote speech at Technology Review's EmTech conference, he touted his company's service not as, say, letting you make calls and surf the Web, but "connecting you to your community of friends." So it's a social network! Ah, but a social network that requires buying a phone (as much as $295) and signing up for service ($85 to $90 a month, on average). No wonder Dayton's ersatz social network, cleverly disguised as a cell-phone company, only counts 140,000 users, and is losing hundreds of millions of dollars. Somehow I don't think Facebook CEO Mark Zuckerberg is sweating over this one.

Sky Dayton's wireless company, Helio, as rumored, is getting new funding without help from co-owner EarthLink, an Internet service provider facing financial straits. Joint-venture partner SK Telecom is investing $270 million in Helio and renegotiating its agreement with EarthLink. [Reuters]

Helio, Sky Dayton's wireless-service provider, is cutting back, laying off one out of seven employees, mostly in sales. It's now concentrating efforts, the company says, on its 20 largest markets. The company only has 100,000 subscribers, and 600 employees even after the cutbacks, and is expected to lose more than $300 million this year. EarthLink, the troubled Internet service provider founded by Dayton that's one of Helio's two backers, is rumored to be looking to pull out.

Fresh from his Yahoo gig, Tom Cruise is headed off to a Scientology temple today. This tip just in: