HP to Buy Palm for $1.2 Billion

By Chris Preimesberger  |  Posted 2010-04-28 Print this article Print

The world's second-largest IT systems provider announced in a teleconference April 28 that it has agreed to purchase the struggling smartphone maker for about $5.70 per share.

Long-suffering smartphone maker Palm finally may have found a financial savior.

Hewlett-Packard, the world's second-largest IT systems provider, announced in a teleconference April 28 that it has agreed to purchase the struggling smartphone maker for $1.2 billion in cash on hand, or about $5.70 per share.

The offered purchase price amounts to about a 23 percent premium on the current Palm stock price.

Palm's shares were halted at $4.63 on April 28. HP's shares slipped to $52.25, down $1.03, or 2 percent, in after-hours trading.

An HP spokesperson said that Palm's current chairman and CEO, Jon Rubinstein, is expected to remain with the company. HP also said that it expects the acquisition to close during its third fiscal quarter ending July 31.

Palm, which makes the Palm Pre and other connected phones, has been struggling financially for most of the last decade. 

The company has invested a great deal of time and capital in its WebOS and the Palm Pre and Pixi, but it hasn't been able to compete well with Apple's iPhone and a flood of Android devices from several makers.

Palm sold only 408,000 phones last quarter; in contrast, Apple sold 8.7 million iPhones during the same time period.

Smartphones a $100 billion market -- and growing

Todd Bradley, executive vice-president of HP's Personal Systems group and a former executive at Palm Inc., told a webcast audience April 28 that HP sees not only a $100 billion [and growing by 20 percent per year] smartphone market to tackle, but new opportunities for business making "additional connected mobile form factors."

"We anticipate that with the WebOS [Palm's proprietary mobile operating system], we'll be able to aggressive deploy an integrated platform that will allow HP to own the entire customer experience, to nurture and grow the developer community, and provide a rich media experience for our customers."

Chris Preimesberger Chris Preimesberger was named Editor-in-Chief of Features & Analysis at eWEEK in November 2011. Previously he served eWEEK as Senior Writer, covering a range of IT sectors that include data center systems, cloud computing, storage, virtualization, green IT, e-discovery and IT governance. His blog, Storage Station, is considered a go-to information source. Chris won a national Folio Award for magazine writing in November 2011 for a cover story on Salesforce.com and CEO-founder Marc Benioff, and he has served as a judge for the SIIA Codie Awards since 2005. In previous IT journalism, Chris was a founding editor of both IT Manager's Journal and DevX.com and was managing editor of Software Development magazine. His diverse resume also includes: sportswriter for the Los Angeles Daily News, covering NCAA and NBA basketball, television critic for the Palo Alto Times Tribune, and Sports Information Director at Stanford University. He has served as a correspondent for The Associated Press, covering Stanford and NCAA tournament basketball, since 1983. He has covered a number of major events, including the 1984 Democratic National Convention, a Presidential press conference at the White House in 1993, the Emmy Awards (three times), two Rose Bowls, the Fiesta Bowl, several NCAA men's and women's basketball tournaments, a Formula One Grand Prix auto race, a heavyweight boxing championship bout (Ali vs. Spinks, 1978), and the 1985 Super Bowl. A 1975 graduate of Pepperdine University in Malibu, Calif., Chris has won more than a dozen regional and national awards for his work. He and his wife, Rebecca, have four children and reside in Redwood City, Calif.Follow on Twitter: editingwhiz

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