Bloomberg: Palm is up for sale

SteveW · Apr 13, 2010

Bloomberg: Palm is up for sale

By Nilay Patel posted Apr 11th 2010 11:38PM
Engadget

Uh, whoa. Bloomberg just reported that Palm is putting itself up for sale and that offers will potentially come in this week. That's pretty wild news, considering CEO Jon Rubinstein was adamant just a few days ago that Palm had a plan to get profitable -- even while his company's stock price went on a buyout-rumor fueled rollercoaster. Bloomberg says that Palm's already retained Goldman Sachs and Qatalyst Partners to find a buyer, with HTC (yes!) and Lenovo both expressing interest -- and Dell's apparently already taken a pass. Naturally none of these parties are saying anything on the record -- we just pinged Palm and they declined comment -- but if this is true, things are about to get wild, and fast. We'll keep you updated, stay tuned.

SW

SteveW · Apr 13, 2010

Palm Said to Tap Goldman, Quattrone to Find Buyers (Update5)

By Serena Saitto and Ari Levy

April 12 (Bloomberg) -- Palm Inc., creator of the Pre smartphone, is seeking bids for the company as early as this week, according to three people familiar with the situation.

The company is working with Goldman Sachs Group Inc. and Frank Quattrone’s Qatalyst Partners to find a buyer, said the people, who declined to be identified because a sale hasn’t been announced. Taiwan’s HTC Corp. and China’s Lenovo Group Ltd. have looked at the company and may make offers, said the people.

More...

SW

cheddar · Apr 13, 2010

It would be a good buy for somebody without their own OS. WebOS is good and Palm's got enough patents to keep someone like Apple at bay.

SteveW · Apr 13, 2010

Wirelessly posted (T-Mobile G1: Mozilla/5.0 (Linux; U; Android 1.6; en-us; T-Mobile G1 Build/DMD64) AppleWebKit/528.5+ (KHTML, like Gecko) Version/3.1.2 Mobile Safari/525.20.1)

The question is, how can a new owner/investor make money, where Palm has failed with its current investors? If a manufacturing company buys them, perhaps they would have lower costs of manufacturing. If a company with good carrier relationships buys them, perhaps they would have better distribution and marketing. But if consumers don't buy the phone, and they haven't yet, the result will be same. I'm sure that smart people are running the numbers, but personally I don't see how an investment in Palm can pay off.

SW

cheddar · Apr 14, 2010

The problem is that if you do not own the OS than you are beholden to someone else for the most important part of your product. I think one of the biggest problems Palm has is the perception that they failed before WebOS was even released.

budney · Apr 16, 2010

And the plot thickens.... From Engadget:

Palm's SVP of software and services takes off, others given cash, stock to stick around (updated)

By Chris Ziegler posted Apr 16th 2010 8:53PM

No one really knows exactly what's going on inside the walls of Palm HQ this week -- whether the company will sink or swim is perhaps a bigger question right now than it has been since its rebirth last year, and if it does swim, whether it remains independent is another matter altogether. In an SEC filing today, Palm quietly revealed that its senior VP of software and services -- Michael Abbott (pictured above), a man who has been largely responsible for webOS as a platform and the critical Mojo and Ares SDKs -- will be gone as of April 23. More interestingly, though, it had to hook up a couple other key players with stock packages and $250,000 in cold, hard cash to get them to agree to stick around for a couple years: Jeff Devine, SVP of global operations, and Doug Jeffries, the CFO. Yes, that's right -- Palm's chief financial officer may have damn near split in the past few days, which is never a good sign for a company whose financial stability is in question. More on this situation as it develops.

[Thanks, Herman]

Update: Since our original report, a number of SEC Form 4s have crossed the wire, indicating that Palm is handing out various quantities of shares to pretty much everyone on the executive roster. Acquisitions frequently involve retention deals for key company players to make sure that the buyer's new assets aren't instantly brain-drained, so it's entirely possible that this is all a harbinger of an impending deal.

Palm (SEC 8-K filing)
Click to expand...

budney · Apr 23, 2010

Lenovo is still in, but HTC is not after looking at Palm's books.

* HTC not bidding for Palm after reviewing its numbers-source
Stocks | Mergers & Acquisitions | Global Markets | Media | Telecommuncations Services
* Lenovo shares surge to 23-month high
* Lenovo had over $2.4 billion in net cash at end-2009
* Palm could potentially fetch $1.3 billion (Recasts, adds details throughout)
By Kelvin Soh
HONG KONG, April 23 (Reuters) - Lenovo (0992.HK), the world's No.4 PC brand, has emerged as the leading candidate to buy struggling smartphone maker Palm (PALM.O), after the U.S. firm was rebuffed by other potential Asian buyers, sources said.
Shares of Hong Kong-listed Lenovo rose as much as 5.9 percent percent to a 23-month high on Friday, helped by expectations of strong growth in the sector and speculation that it could bid for the U.S. company once considered a pioneer in the smartphone space.
"A most suitable candidate will be a mainland Chinese company," said Lu Chialin, an analyst at Macquarie Securities in Taipei. "They've got a lot more free cash and don't have the brand presence in the United States, so that will all give them that boost they need."
Investment banking sources said they had heard that Lenovo is looking into a possible bid for Palm, but did not have any further details.
HTC (2498.TW), the world's No. 5 smartphone brand and one name associated with a possible offer, was approached about making a bid but decided to pass after reviewing Palm's books, a source with direct knowledge of the situation said.
"There just weren't enough synergies to take the deal forward," said the source, who declined to be identified because the talks were private.
Huawei [HWT.UL], the world's No.2 wireless telecoms equipment maker, also declined to put in a bid, a company source said earlier this month. Smaller rival ZTE (0763.HK), also mentioned in earlier reports as a possible bidder, was not approached on the deal, its chairman told Reuters. [ID:nTOE63E09I]
Representatives from HTC and Lenovo both declined to comment, and Palm officials were not immediately available outside regular U.S. business hours.
Earlier this week, Lenovo's Chief Executive Yang Yuanqing also declined to comment about a possible Palm buy. Shares in the company closed up 2.7 percent at HK$6.09 in a Hong Kong markets .HSI down 1 percent.
BUYER OF FADED LEGENDS
Industry observers said Palm would fit well into cash-rich Lenovo's current strategy that focuses on growth through acquisitions and movement into the wireless space.
Lenovo had over $2.4 billion in net cash reserves at the end of 2009, it said on its website, and has previously said that it remains open to merger opportunities.
Based on recent deals in the technology sector, a Palm sale could potentially fetch $1.3 billion, given its current $1 billion market capitalisation and the 30 percent premium recently paid in tech deals.
The company's advisers had previously been seeking about $1.2 billion for the company -- a valuation considered too rich by many suitors, one investment banking source said, speaking on the condition of anonymity.
Another investment banking source, who also spoke on condition of anonymity, said he was unsure on how aggressively Lenovo was going to be in bidding for Palm.
"What are you buying - a good operating system?" he said. "It's a wounded brand."
Palm has struggled to generate interest from buyers in its Pre and Pixi smartphones, with customers turning to more popular buys such as Apple's (AAPL.O) iPhone and Research in Motion's (RIM.TO) Blackberry. It sold about 408,000 units in the quarter ending Feb. 26, lower than the 600,000 units or more many analysts were expecting. [ID:nN18254531]
After selling its cellphone unit to focus on its core PC business, Lenovo bought back the unit last year as part of its aim to become the Chinese market leader in mobile communications, as the sector starts to converge with PCs.
Since then, Lenovo has launched a smartphone in China, but still has no presence in the U.S. market, which remains the world's largest smartphone market by number of users, according to research firm IDC.
Market research firm Gartner expects growth in the smartphone sector to outpace PCs in 2010, drawing a flurry of new entrants into the sector once dominated by names like Nokia (NOK1V.HE) RIM.
The Palm purchase, if realised, would also fit into Lenovo's history of expanding into competitive Western markets by buying former product pioneers that have lost their edge.
The company is best known for buying IBM's (IBM.N) PC business in 2005, and it also tried to buy Packard Bell in late 2007, only to be thwarted by bigger rival, Taiwan's Acer (2353.TW).
The strategy has its critics.
"It's not a good idea for Lenovo to buy Palm right now," said Vincent Chen, an analyst at Yuanta Securities. "If it does, it's got to be prepared to take on some of Palm's losses and may have to see at least a few more quarters of losses from them." (Additional reporting by Michael Flaherty and Melanie Lee in Shanghai; Editing by Doug Young and Lincoln Feast)
Click to expand...

UPDATE 2-Lenovo emerges as leading candidate for Palm -sources | Reuters

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