HP Buys Palm for $1.2 Billion
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HP announced today that they will acquire mobile phone maker Palm for $5.70 per share of Palm common stock. This $1.2 billion transaction is a lifeline that Palm desperately needed as they faced increased competition and dwindling relevance in a very competitive mobile device market.
Palm has been on the ropes for that past year and has been actively looking for a buyer. There was considerable speculation on possible suitors but HP was not considered to be on the shortlist. With this acquisition, HP will aggressively push Plam’s webOS into devices beyond smart phones and compete more than ever with Apple’s iPhone and iPad business. During a conference call today, Todd Bradley, HP’s EVP for their Personal Systems Group, stated “I think the tablet/slate products are such new markets, we see opportunities broadly for consumers… [and] enormous interest on behalf of channel partners with specific vertical deployments in things like healthcare and education.”
With HP’s deeper pockets and product resources, we think HP will become a larger player in the burgeoning tablet space and a serious competitor to Apple’s iPad. It will be interesting to see if HP’s investment will payoff and whether they are successful in growing an applications eco-system around the webOS, something Palm had failed to do.
