Former AT&T Corp. executive David Nagel has joined Palm Inc. as president and CEO of the company's newly-formed operating system division.

Nagel, who has been a Palm board member since February 2000, most recently was chief technology officer and president of AT&T Labs.

In his new role, Nagel will spearhead efforts to improve the capabilities of Palm's handheld computer platform, which has faced flagging sales and a competitive battle with Microsoft Corp.'s PocketPC line.

Palm's plan is to create two independent companies: one that focuses on software development and licensing, and another aimed at hardware. The software division is expected to spin out and operate as an independent, wholly-owned Palm subsidiary before the end of the year, the company said.

Nagel's group will target expansion into new areas such as wireless communications and advanced multimedia applications.

In connection with the cable industry, Nagel also has board duties with Liberate Technologies and RespondTV Inc.

In related news, Hossein Eslambolchi has succeeded Nagel as chief technology officer and president of AT&T Labs, responsible for heading up the engineering behind the company's Internet protocol and packet networks.