HP to Acquire Palm for $1.2 Billion

Seems to be a good match, HP and Palm...

 

I don't know if it adds much, but here is the story at the NY Times:

Hewlett-Packard Agrees to Buy Palm

 

Indeed! :browani:

 

Color me skeptical. HP has deep pockets, sure. And they want to get back to being relevant in mobile devices. And now they can make a tablet without paying royalties to Microsoft. But they could have made an Android tablet, without spending $1 billion. Are Palm's patents worth that much? Most software patents turn out to be cr*p when challenged. Palm has smart engineers, but HP is going to have to find something for them to do, or they will leave.

I don't think HP would do a deal like this based on vague possibilities. They would only spend $1 billion for real devices (that could be produced in the next 2-3 years) that can make the $1 billion back with interest. I don't know what those devices are, but I wish them all the best.



SW

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indeed +1!!!

 

I do. As you said, HP has deep pockets, and they do want to get back into the mobile arena, but didn't know how. "Oh look, Palm is for sale!" Bada-bing. True, it's a bit of a gamble, but big corporations take big risks. HP and Palm are also both US based, actually both in/near Palo Alto, so thats another big plus. I think the rest will fall in line.

 

Smart move by HP. :thumb:

 

From the Times story:

So they didn't lose money, but returns like that are certainly not what venture capitalists are in the game for.


SW

 

Here's Adam Lashinsky's take:

HP-Palm: Everyone's a loser but Apple
Posted by Adam Lashinsky, Sr. Editor at Large
Fortune
April 28, 2010 5:09 PM

Hewlett-Packard's Palm buy could be a good fit, but it's got a long way to go before it can catch up with the iPhone.

Not even a year ago Palm (PALM) and its chief investor, Elevation Partners, confidently spun a yarn about the pioneering company's long-term plan. The smartphone market was nascent. It was going to be massive. Even a small share of such a big market would lead to huge success for a smaller player like Palm.

Unfortunately for Palm, while the first two legs of its narrative stool are correct, the third isn't, which is why Palm folded Wednesday with its fire-sale purchase by Hewlett-Packard (HPQ). Let this be a cautionary tale for all sorts of reasons:

Managerial hubris. Palm CEO Jon Rubinstein has had an inspired career at HP, NeXT and most importantly, Apple (AAPL). He likely is one of the great product engineers ever. But as CEO of a underdog company where marketing and finance are tricky, complicated and demanding, even Rubinstein's brilliance weren't enough. (To his credit, he put on a brave face until the end.) The bitter pill for Rubinstein will be that he wasn't able to accomplish on his own what he was under the tutelage of Steve Jobs. There is no shame in this. Almost no one has accomplished what Steve Jobs has. To try was valiant. To pull it off proved another story.

Investor hubris. Books may well be written about Palm and the merry band of ex-Apple executives who tried to revive it. Books also may be written about Elevation, which was supposed to focus on digital media and entertainment but instead got itself twisted around lost causes like Palm (a phone company), Forbes (an old media company), and Move.com (a busted dot-com). Again, Apple is part of the story. Elevation partner Fred Anderson was CFO at Apple and instrumental in Apple's own rejuvenation. He also got thrown under the bus in the Apple backdating affair. Though he's too much of a gentleman to say so, Palm was a form of salvation for Anderson.

No company can do everything. HP is getting Palm for a relative song, and the purchase is a qualified win for HP personal-computer executive Todd Bradley, who has a complicated history of his own with Palm. (He once was CEO of one of its earlier iterations.) Yet it's telling that HP found itself in the position of having to buy Palm at all. HP was an early and important player in smartphones itself as a result of its acquisition of Compaq. As with much of the rest of its business, HP's smartphone strategy was based on Microsoft (MSFT) software. Today, HP is a non-player in smartphones, hence its acquisition of struggling Palm, which to its credit has a superior product to HP's and decent relationships with wireless carriers.

By buying Palm, HP gets very good technology, some outstanding people, and existing carrier contracts. HP in turn will be able to throw its considerable marketing and purchasing power behind Palm's phones. HP is years behind Apple, though. Apple, again, is the sole unconditional winner. At least for now.

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SW