HP Reaches Agreement to Buy Palm

In what can only be seen as great news for smartphone-maker Palm, Hewlett-Packard is planning to purchase Palm for about $1.2 billion, said the companies.
The deal would help the struggling Palm while buying HP a greater foothold in the smartphone market.
Palm’s smartphone OS on the Palm Pre and Pixi series phones launched to a promising reception last year, but sales soon flagged. Despite the coveted multi-tasking capability of its phones, Palm’s sell-through in the most recent fiscal quarter was down 15 percent over last year and the company reported a $22 million net loss.
HP’s executive VP of the personal systems group Tom Bradley said, “Palm possesses significant IP assets and has a highly skilled team. The smartphone market is large, profitable and rapidly growing… and HP intends to be a leader in this market.”
For its part, Palm said it was thrilled with by HP’s “vote of confidence in Palm’s technological leadership,” according to chairman and CEO Jon Rubinstein, who is expected to remain with the company.
Palm stockholders will receive $5.70 in cash for each share of Palm common stock that they hold at the closing of the merger expected before July 31.
“HP brings a worldwide foot print, money, and engineering to the deal and Palm brings the carrier relationships, a solid, but young OS and a brand that has value…But the real question is can HP be sexy enough. Can they go from being a Susan Boyle to Beyonce,” said Larry Reich president of Digital Age Communications, a veteran CE consultant. The deal could curb Android’s rapid takeover of the smartphone market and also reach into other product categories like tablet PCs. “I also think it’s a knock against Dell. Dell is putting all its eggs in the Android basket. I think it hurts Android because they lose the biggest player in computing. Nokia is floundering; RIM is running as fast as they can to become modern with 6.0 and RIM may be the next big acquisition,” said Reich.
Apple has about a 17 percent share of the world smartphone market and is facing increasing competition from the large number of Android based phones hitting the market.
Source: HP