Thursday, April 29, 2010
Palm sold $1.2 billion to HP
Hewlett-Packard announced it will buy beleaguered smartphone maker Palm (NASDAQ: PALM) for $1.2 billion, ending weeks of speculation about the company's fate and pushign H-P deeper into the smartphone market.
Acquisition speculation has been rampant since multiple reports earlier this month indicated Palm had tapped Goldman Sachs and another investment bank, Qatalyst Partners, to find a buyer. HTC, Lenovo and other handset makers had been bandied about by analysts as potential suitors. H-P was sometimes mentioned, but had not been thought of as a serious contender. Through the deal, H-P joins the likes of computer makers Dell, Lenovo and Acer in targeting the smartphone market.
And for all you webOS fans out there: Don’t worry — it doesn’t look like the platform is going anywhere just yet. It appears that the companies plan to continue the development of webOS, leveraging HP to “rapidly accelerate the growth” of the platform.
During a conference call with analysts after the deal was announced, Todd Bradley, executive vice president of H-P's Personal Systems Group, praised Palm's webOS operating system and said that H-P will leverage its distribution channels and financial strength to help expand the platform. He said H-P expects to take webOS beyond smartphones, possibly to tablets and netbooks for both consumers and enterprise users.
Contrary to previous whispers, it appears that CEO Jon Rubinstein will be staying with the company. To quote the release, “Palm’s current chairman and CEO, Jon Rubinstein, is expected to remain with the company.”
One outstanding question is what will happen to the Palm brand. According to Engadget, H-P has not yet decided how to handle the Palm brand whether to replace it with the H-P brand, maintain the Palm branding or somehow join the two.
In its most recent quarter, Palm reported a net loss of $18.5 million, narrower than the $95 million net loss it posted in the year-ago period. The company shipped a total of 960,000 smartphone units during the quarter, up 23 percent from the second quarter of fiscal year 2010 and an almost 300 percent increase from the year-ago quarter. However, smartphone sell-through for the quarter, which ended Feb. 26, was 408,000 units, down 29 percent from the second quarter and down 15 percent year-over-year.