Mobile Products for Consumers, Professionals, and Business. HP to buy Palm for $1.2 billion - Apr. 28, 2010. By David Goldman, staff writerApril 29, 2010: 3:42 AM ET NEW YORK (CNNMoney.com) -- Hewlett-Packard announced Wednesday that it would buy struggling smart phone maker Palm for $1.2 billion.
HP (HPQ, Fortune 500) -- which is known more for its computers, notebooks and printers than its smart phones -- will buy Palm (PALM) for $5.70 a share in cash, a 23% premium over Palm's closing price of $4.64 on Wednesday. After hours, shares of Palm soared 28%, while shares of HP fell less than 1%. "Palm's innovative operating system provides an ideal platform to expand HP's mobility strategy and create a unique HP experience spanning multiple mobile connected devices," Todd Bradley, vice president of HP, said in a prepared statement. On a conference call with analysts, Bradley said HP is looking to increase its market share in the rapidly growing smart phone market. "HP and Palm will make a powerful combination," said Bradley. Intriguing combination Share thisShare this.
With Palm, HP reboots mobile strategy. With its purchase of Palm, Hewlett-Packard acquired more than just a smartphone maker.
It also picked up a whole new strategy for its mobile devices. HP said Wednesday it plans to acquire Palm for $1.2 billion , or $5.70 per share, which amounts to a 23 percent premium over Palm's actual stock price at the end of the day. But for a leading technology company like HP with almost zero mobile phone presence and $13.5 billion in cash , picking up a company with a fully developed mobile operating system, a decent lineup of devices, and trove of mobile patents is a bargain. It will also make HP a viable competitor in the growing mobile market. Mobile phones are now a $100 billion market. By planning to infuse plenty of funding into its new mobile strategy with Palm, HP is expecting "solid growth" going forward, Todd Bradley, executive vice president of HP's Personal Systems Group, said on a conference call with investors Wednesday.
Did HP save Palm with acquisition? Or did it save itself? At first glance, HP looks like a savior for coming in and saving Palm from its inevitable demise.
After all, it's no secret that Palm has been struggling to gain traction despite the standing ovation it received at the unveiling of WebOS and the Palm Pre at CES 2009. But the world of mobile has gone through quite a bit of change in that time - iPhone became an even hotter seller; Android hit the scene hard with a lineup of devices and carrier partners; Microsoft's Windows Mobile 7, as well as Research in Motion's Blackberry 6, are just about ready for prime time. And, globally, devices with a new Symbian smartphone OS are expected before year's end. OK, so Palm needed HP. But what about HP? Also see: iPhone growth magnifies global smartphone potential Obviously, it needed a smartphone strategy.
And then there's the tablet/netbook game. Sure, there are naysayers who will argue that HP paid too much for a company that was in over its head and desperately in need of a buyer.