UPDATE: H-P To Acquire Palm For $961 Million
April 28 2010 - 4:30PM
Dow Jones News
Hewlett-Packard Co. (HPQ) is placing a $961 million bet that it
can do more with Palm Inc.'s (PALM) critically lauded but
commercially troubled mobile software than the embattled smartphone
pioneer could do by itself.
H-P is making a large move into the smartphone world with its
agreement to acquire Palm for $5.70 a share in cash, which
represents a 23% premium to Wednesday's closing price. Including
debt, the deal is valued at $1.2 billion. Palm has been the subject
of takeover speculation for the past several months as its products
failed to make a dent with consumers.
Palm shares rose 27% to $5.86 in after-hours trading, while H-P
fell 1.6% to $52.44.
In Palm, H-P gets a sophisticated and different mobile operating
system that it can use to set itself apart from the dozens of
handset makers that have jumped on Google Inc.'s (GOOG) Android
bandwagon. It also gets a healthy portfolio of mobile patents and a
talented team of developers led by Chief Executive Jon
Rubinstein.
H-P CEO Mark Hurd hasn't been shy about striking big deals. In
2008, it purchased EDS for $13.9 billion for its IT services. In
November, it agreed to acquire 3Com for $2.7 billion to augment its
networking capabilities.
For Palm, it has been a long spiral downward towards the
eventual takeover. Rubinstein breathed new life into the company
when he came aboard as an executive chairman tasked to create a new
platform for the company. The Palm Pre, which was the first device
to use the company's WebOS software, was unveiled more than a year
ago to critical acclaim and excitement.
But a launch that coincided too closely with the latest version
of the Apple Inc. (AAPL) iPhone and a weak carrier partner in
Sprint Nextel Corp. (S) kept the phone from true blockbuster
status. Its launch on Verizon Wireless earlier this year saw tepid
response, resulting in the carrier slashing prices of Palm's
products. Verizon Wireless is jointly owned by Verizon
Communications Inc. (VZ) and Vodafone Group PLC (VOD).
The company hired advisors and a number of Asian technology
companies, including HTC Corp. (HTCXF, 2498.TW) and Lenovo Group
Ltd. (LNVGY, 0992.HK), were reportedly interested in pursuing a
deal.
Palm, which helped pioneer the concept of melding PC-features
with a mobile phone, will now be responsible for propelling H-P's
mobile ambitions. The troubled company will have the benefit of
H-P's much wider distribution and stronger brand.
Separately, Palm disclosed that it expects fiscal fourth-quarter
revenue of $90 million to $100 million. It also expects to end the
period with $350 million to $400 million in cash and short-term
equivalents.
Wall Street, on average, had a fiscal fourth-quarter revenue
forecast of $165 million.
-By Roger Cheng, Dow Jones Newswires; 212-416-2153;
roger.cheng@dowjones.com
Palm (MM) (NASDAQ:PALM)
Historical Stock Chart
From Jun 2024 to Jul 2024
Palm (MM) (NASDAQ:PALM)
Historical Stock Chart
From Jul 2023 to Jul 2024