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HP Buying Palm for $1.2 Billion

Posted on Wednesday, Apr 28th 2010

Well, just about a month back, I analyzed what went wrong at Palm (NASDAQ:PALM) and said that the best fit for Palm as an acquirer would be HP (NYSE:HPQ).

Well, HP IS acquiring Palm for $1.2 billion in cash including debt. HP will pay $5.70 per Palm share, a 23% premium to Wednesday’s closing price of $4.63. Shares in Palm have fallen 52% over the past 12 months.

Ironically, HP just acquired 3Com, the former owner of Palm. Palm was spun out of 3Com, taken public, then lost its leadership position in the PDA business that it successfully pioneered, having missed the smartphone opportunity initially.

Under HP, as I said recently, Palm will have an opportunity to build an enterprise applications strategy, utilizing HP’s strong enterprise channel.

We will watch closely!

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Palm did one initial great – and hard – choice : simplify the PDA so it could fit into a pocket.

This was then followed by a decade of lost and costly opportunities: USRobotics / 3Com / Handspring fork and return / PalmSource fork and loss / WebOS

Great product, bad timings. Curiously enough, Windows Mobile, long considered as the reason for Palm’s decline, is not that much of a threat these days.

It will therefore nail down to how well this n-th integration succeeds – maybe time to ask Eric Benhamou for some advice ?

Philippe J DEWOST Wednesday, April 28, 2010 at 3:38 PM PT

I think what will determine the success of HP with Palm is how well they integrate their enterprise strategy with Palm, and really make it a great platform for enterprise / prosumer cloud apps.

Sramana Mitra Thursday, April 29, 2010 at 10:14 AM PT