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Palm's wild ride

|Includes: HPQ, Palm, Inc. (PALM)

After all the speculation about who will purchase Palm, after analysts throughout the industry valued the stock from anywhere between zero to ten dollars per share, Palm found its savior in Hewlett Packard.
In a press release on Wednesday, HP said that they would acquire the struggling phone manufacturer for 1.2 billion dollars, which includes assuming Palm’s debt.  As an increasing number of computer manufacturers are looking to enter the smart phone market, the purchase of Palm provides HP an established brand who carriers its own signature operating system.  In its press release, HP added that they are excited about the acquisition and plan to use Palm’s WEBos to bolster its future offerings in the market.
 “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, executive vice president of HP’s personal systems group, said in a statement. “The Smartphone market is large, profitable and rapidly growing, and companies that can provide an integrated device and experience command a higher share. Advances in mobility are offering significant opportunities, and HP intends to be a leader in this market.”
For HP, Palm will be considered a valuable addition to their team.  Hewlett Packard, who is the number one computer manufacturer in the U.S., has been nearly absent in the mobile phone market at a time when their major competitors, such as, Dell and Asus have already made plans to enter the industry.
For Palm shareholders, Wednesday’s announcement marked the end of the turbulent ride that has been Palm.  In the last year, Palm’s value has ranged from 18.09 per share to 3.65 per share.  In recent months, analysts covering the stock gave Palm a wide range of values from 0.00 to 14.00 per share.
HP said Palm's current chairman and CEO, former Apple Inc. executive Jon Rubinstein, is expected to remain with the company.  In after-hours trading, Palm was up 27.4%, or $1.27 to $5.90 while HP shares were down 38 cents, or -0.7%, to $52.90.


Disclosure: No Position