After weeks of speculation about Palm’s fate, HP announced late last month that they plan to purchase the struggling PDA maker at a price of $1.2 billion, surprising both the PC and mobile phone industries.The computing giant will pay $5.7 in cash for each share to current Palm shareholders, representing a 23 percent premium above Palm’s closing price. The transaction has been approved by the boards of directors of both companies, and is expected to close by the end of HP’s third fiscal quarter, July 31. Jon Rubinstein, Palm’s chairman and CEO, is likely to stay with the company, although the role he will play remains to be decided.
HP said they plan to invest in the research & development and sales & marketing of Palm’s WebOS mobile operating system. They will also continue to foster the WebOS developer community, which currently offers over 2,000 apps to users. The company expects to take the platform to not only smartphones, but also an array of mobile products like slates, tablets and netbooks, for both consumers and enterprise users.
Palm, the pioneer of handheld computing devices, has been struggling from ongoing losses in recent years due to tough competition. In the hope of turning things around, Palm and Sprint introduced the Pre and Pixi touchscreen smartphones last year, both running on its new WebOS operating system. However, the devices were not selling as well as expected and future earnings are not looking good either.
Acquisition rumors had been flying around since the release of Palm’s disappointing earning report for the latest quarter. Companies like Lenovo, Dell, Huawei and even HTC were suggested by analysts as potential buyers, but it turned out none of them are interested in the offer.
By taking over Palm, HP has greatly enhanced its ability to scramble for a spot in the mobile field. Players like Apple, Google, HTC and Research in Motion might have to watch out for a competitive rival to emerge in the future.
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