Hewlett-Packard to Buy Palm
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After weeks of speculation about which major corporation would buy smartphone maker Palm, Hewlett-Packard has stepped forward to finalize the acquisition for $1.2 billion.
The journey to this point has been uneven at best. Palm has been struggling for quite some time; its Pre and Pixi smartphones were well reviewed but failed to sell well. Palm was reported to be up for sale, then not for sale, then up for sale once again. Now HP is agreeing to buy the mobile phone maker.
The asking price works out to $5.70 per share, which is actually a 23 percent premium on the current stock price for Palm. Unfortunately, that is still half of what Palm stock was valued at not long ago, when Palm was still receiving acclaim for the Palm Pre smartphone and its new WebOS operating system.
While HP has only made tentative steps in the mobile phone market and has let the iPaq line of PDAs languish, the company doesn't need Palm for hardware. HP is interested in the very WebOS operating system that garnered praise for Palm.
"Palm’s innovative operating system provides an ideal platform to expand HP’s mobility strategy and create a unique HP experience spanning multiple mobile connected devices,” HP official Todd Bradley said in a statement. “And, Palm possesses significant IP assets and has a highly skilled team. The smartphone market is large, profitable and rapidly growing, and companies that can provide an integrated device and experience command a higher share. Advances in mobility are offering significant opportunities, and HP intends to be a leader in this market."
WebOS and other Palm properties will help HP leapfrog into the mobile market. It's still unclear if HP will continue its tentative plans to produce a phone with the Windows Phone 7 operating system.
It's possible that HP will also use WebOS to create more tablets, since other manufacturers have shown that the iPhone and Android smartphone operating systems are sufficient for tablets. HP is currently preparing to release a tablet running the full Windows 7 operating system, which many experts think is too cumbersome for a tablet interface.
"We’re thrilled by HP’s vote of confidence in Palm’s technological leadership," Palm CEO Jon Rubenstein said in the announcement. "HP’s longstanding culture of innovation, scale and global operating resources make it the perfect partner to rapidly accelerate the growth of WebOS.”
Rubenstein is expected to stay with the company, according to the announcement. The acquisition is not yet final, pending approval from stockholders and regulatory organizations. The deal is expected to become final before the end of July.
