Lenovo, Not HTC, Emerges as Frontrunner for Palm

HTC, Nokia, Motorola and Research in Motion have all been named as companies that might benefit from purchasing smartphone-maker Palm, which has struggled for some time to keep a foothold in the market it initially helped create.
However, an April 23 Reuters reported finds that Lenovo appears to be the most likely candidate to place a bid.
HTC was described, on April 11, as being interested in discussing the matter with Palm, but after a review of Palm’s books, it has decided to pass.
“There just weren’t enough synergies to take the deal forward,” according to Reuters, which quoted a source “with direct knowledge of the situation.”
ZTE and Huawei were described as potential candidates in an April 13 report from analyst Jack Gold, of J. Gold Associates, who wrote that either could “leverage both the Palm brand and its technology for both domestic and international market expansion.”
According to Reuters, however, Huawei has decided it isn’t interested, and the chairman of ZTE said he has not been approached about the deal.
Perhaps feeling a bit spurned, Palm CEO Jon Rubinstein told the Financial Times April 22 that he felt “bullish” about Palm’s future and believes the company can survive on its own.
“I believe Palm can survive as an independent company. We have a plan that gets us to profitability,” Rubinstein told FT.
Rubinstein added that Palm had several new products in development and is working “fast and furious on new handsets,” and that Palm is also open to the idea of extending use of its webOS operating system to other manufacturers.
Among the many analysts who have praised webOS, Gold, in his April report, wrote that it’s a “good, modern OS, and it could be a strong competitor to Android-based devices given a proper level of marketing investment, especially in the home markets of the acquirer.”
Palm first introduced webOS with the June 2009 launch of the Palm Pre, and later the Palm Pixi. While the devices were well reviewed, and the platform applauded, they faced a bit of a perfect storm, arriving literally days before Apple’s introduction of the iPhone 3G S and within weeks of what would be an onslaught of Android-running devices. Analysts have added that Palm’s choice to launch the Pre with wireless carrier Sprint was also a mistake, contributing to Palm’s bad fortune.
On Feb. 25, Rubinstein – a former Apple employee and the man said to be behind the Pre and Palm’s hoped-for turnaround – warned Wall Street that Palm’s third quarter results were going to be below expectations.
The figures Palm reported March 18, however – which included sales of just 408,000 smartphones during the quarter – still came as a shock. After initiating new employee training and Pre and webOS awareness campaigns, Reuters reported April 11 that Palm had hired Goldman Sachs and Qatalyst Partners to help it find a buyer.
Palm enjoyed a momentary jump in stock prices after April 14, following news that Harbinger Capital, which is owned by hedge-fund billionaire Philip Falcone, holds a 9.48 percent stake in the company. Its latest blow followed shortly after, however, with news that retailer RadioShack was reportedly no longer refreshing its supplies of Pre and Pixi handsets, in favor of new phones from Sprint.
Lenovo CEO Yang Yuanqing declined to comment about the company’s interest in Palm, according to Reuters, which estimates that, were it to sell, Palm might see a sale price of $1.3 billion.