HP buys Palm to expand in Internet-linked device market
By Rachel Metz |
April 30, 2010, Friday
|
Print Edition
Print Edition
PALM Inc, a pioneer in the smartphone business that couldn't quite make the comeback it needed, has agreed to be bought out by Hewlett-Packard Co for about US$1.4 billion in cash.
The two companies announced on Wednesday that the deal will see HP pay US$5.70 for every Palm common share and certain preferred shares. Also included in the US$1.4 billion price tag are payments for additional preferred shares, warrants and employee restricted stock units.
Counting Palm's cash and debt, HP's offer values the company at US$1.2 billion.
Palm was founded in 1992 by Donna Dubinsky and Jeff Hawkins and helped originate the handheld computing market with its Palm Pilot "personal digital assistants" in the 1990s. But after Palm reshuffled itself repeatedly - it was bought by US Robotics, a modem maker that itself was bought by 3Com Corp in 1997, and then spun off again as its own company in 2000 - other companies took control of the market.
In recent years, as handheld computers morphed into "smartphones," Palm struggled to keep up as consumers flocked to Apple Inc's iPhone and Research In Motion Ltd's BlackBerry. In the past year, phones that use Google Inc's Android operating software have added new competition.
Palm got itself into position for a turnaround last June, when it released a sleek touch-screen smartphone called the Pre and fresh operating software for it that won good reviews.
But consumers were slow to embrace the Pre and its newer, smaller sibling, the Pixi. In the most recent quarter, Palm sold just 408,000 phones. In its last quarter Apple sold 8.75 million iPhones.
And its current quarter is looking bleaker: On Wednesday, Palm lowered its forecast for the three-month period that ends in May, predicting in a regulatory filing that it will report US$90 million to US$100 million in revenue due to sluggish phone sales. It previously predicted less than US$150 million in revenue.
HP hopes Palm's webOS operating system, which runs the Pre and the Pixi, will help it participate more aggressively in the fast-growing market for Internet-connected mobile devices.
Known for its printers and PCs, HP also has a line of phones called the iPAQ of which it sold just 100,000 units.
The two companies announced on Wednesday that the deal will see HP pay US$5.70 for every Palm common share and certain preferred shares. Also included in the US$1.4 billion price tag are payments for additional preferred shares, warrants and employee restricted stock units.
Counting Palm's cash and debt, HP's offer values the company at US$1.2 billion.
Palm was founded in 1992 by Donna Dubinsky and Jeff Hawkins and helped originate the handheld computing market with its Palm Pilot "personal digital assistants" in the 1990s. But after Palm reshuffled itself repeatedly - it was bought by US Robotics, a modem maker that itself was bought by 3Com Corp in 1997, and then spun off again as its own company in 2000 - other companies took control of the market.
In recent years, as handheld computers morphed into "smartphones," Palm struggled to keep up as consumers flocked to Apple Inc's iPhone and Research In Motion Ltd's BlackBerry. In the past year, phones that use Google Inc's Android operating software have added new competition.
Palm got itself into position for a turnaround last June, when it released a sleek touch-screen smartphone called the Pre and fresh operating software for it that won good reviews.
But consumers were slow to embrace the Pre and its newer, smaller sibling, the Pixi. In the most recent quarter, Palm sold just 408,000 phones. In its last quarter Apple sold 8.75 million iPhones.
And its current quarter is looking bleaker: On Wednesday, Palm lowered its forecast for the three-month period that ends in May, predicting in a regulatory filing that it will report US$90 million to US$100 million in revenue due to sluggish phone sales. It previously predicted less than US$150 million in revenue.
HP hopes Palm's webOS operating system, which runs the Pre and the Pixi, will help it participate more aggressively in the fast-growing market for Internet-connected mobile devices.
Known for its printers and PCs, HP also has a line of phones called the iPAQ of which it sold just 100,000 units.
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