HP to acquire Palm for $1.2 Billion
HP announced Wednesday that it has entered into a definitive agreement to purchase struggling smartphone maker Palm in an all cash deal worth 1.2 billion.
Under terms of the agreement, HP will pay $5.70 per share of Palm common stock for a total of nearly $1 billion, or approximately $1.2 billion when Palm's debt is factored into the mix. The transaction has been approved by the HP and Palm boards of directors.
“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,” said Todd Bradley, executive vice president, Personal Systems Group, HP. “And, Palm possesses significant IP assets and has a highly skilled team. 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.”
HP believes that its global scale and financial strength combined with Palm’s webOS platform will enhance its ability to compete more aggressively in the fast-growing, highly profitable smartphone and mobile device markets. Among the features of webOS that HP is looking to leverage are multitasking and always up-to-date information sharing across applications, according to a joint press release from the two companies.
“We’re thrilled by HP’s vote of confidence in Palm’s technological leadership, which delivered Palm webOS and iconic products such as the Palm Pre. HP’s longstanding culture of innovation, scale and global operating resources make it the perfect partner to rapidly accelerate the growth of webOS,” said Jon Rubinstein, chairman and chief executive officer, Palm. “We look forward to working with HP to continue to deliver industry-leading mobile experiences to our customers and business partners.”
Under the terms of the merger agreement, Palm stockholders will receive $5.70 in cash for each share of Palm common stock that they hold at the closing of the merger. The merger consideration takes into account the updated guidance and other financial information being released by Palm this afternoon. The acquisition is subject to customary closing conditions, including the receipt of domestic and foreign regulatory approvals and the approval of Palm’s stockholders. The transaction is expected to close during HP’s third fiscal quarter ending July 31, 2010.
Palm’s current chairman and CEO, Jon Rubinstein, is expected to remain with the company.
Palm vs iPhone
Palm was one of the original smartphone vendors, but let its platform slide off into irrelevance. In 2006 the company began licensing Microsoft's Windows Mobile, a move that nearly doubled Microsoft's market share but which did little to help Palm's struggling fortunes.
After Apple debuted the iPhone in 2007, Palm's products plummeted. Over the next year, Palm hired Rubinstein, who had served as the iPod chief at Apple, along with a number of Apple engineers, resulting in the development of the webOS.
While hailed as a major competitive threat to the iPhone at its launch, Palm failed to deliver high quality hardware and was slow to finish its SDK for third party developers. The rushed competitive effort fell flat with last summer's launch of the iPhone 3GS, leaving Palm's prospects uncertain. Cloud computing failures the company suffered through last fall only made things worse.
The only hope for Palm has been the idea that an established manufacturer would buy it and continue to invest in developing its novel smartphone operating system. HTC and Lenovo were considered frontrunners, but HP's purchase makes sense given that company's failed efforts to develop a strong presence in the smartphone category.
HP is a long term partner of Microsoft, but has seen little traction for its PDAs and smartphones based on Windows Mobile. Backed with a motivated, moneyed partner, Palm's webOS may be able to gain a significant profile that will make it a serious competitor to Android, Symbian and the upcoming Windows Phone 7 in their efforts to rival the iPhone and RIM's BlackBerry.
HP has never managed a significant software platform of its own, so the departure into becoming an integrated hardware and software company like Apple and RIM rather than just another device maker licensing other vendors' software like Dell or HTC will be a new role for the company.
Under terms of the agreement, HP will pay $5.70 per share of Palm common stock for a total of nearly $1 billion, or approximately $1.2 billion when Palm's debt is factored into the mix. The transaction has been approved by the HP and Palm boards of directors.
“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,” said Todd Bradley, executive vice president, Personal Systems Group, HP. “And, Palm possesses significant IP assets and has a highly skilled team. 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.”
HP believes that its global scale and financial strength combined with Palm’s webOS platform will enhance its ability to compete more aggressively in the fast-growing, highly profitable smartphone and mobile device markets. Among the features of webOS that HP is looking to leverage are multitasking and always up-to-date information sharing across applications, according to a joint press release from the two companies.
“We’re thrilled by HP’s vote of confidence in Palm’s technological leadership, which delivered Palm webOS and iconic products such as the Palm Pre. HP’s longstanding culture of innovation, scale and global operating resources make it the perfect partner to rapidly accelerate the growth of webOS,” said Jon Rubinstein, chairman and chief executive officer, Palm. “We look forward to working with HP to continue to deliver industry-leading mobile experiences to our customers and business partners.”
Under the terms of the merger agreement, Palm stockholders will receive $5.70 in cash for each share of Palm common stock that they hold at the closing of the merger. The merger consideration takes into account the updated guidance and other financial information being released by Palm this afternoon. The acquisition is subject to customary closing conditions, including the receipt of domestic and foreign regulatory approvals and the approval of Palm’s stockholders. The transaction is expected to close during HP’s third fiscal quarter ending July 31, 2010.
Palm’s current chairman and CEO, Jon Rubinstein, is expected to remain with the company.
Palm vs iPhone
Palm was one of the original smartphone vendors, but let its platform slide off into irrelevance. In 2006 the company began licensing Microsoft's Windows Mobile, a move that nearly doubled Microsoft's market share but which did little to help Palm's struggling fortunes.
After Apple debuted the iPhone in 2007, Palm's products plummeted. Over the next year, Palm hired Rubinstein, who had served as the iPod chief at Apple, along with a number of Apple engineers, resulting in the development of the webOS.
While hailed as a major competitive threat to the iPhone at its launch, Palm failed to deliver high quality hardware and was slow to finish its SDK for third party developers. The rushed competitive effort fell flat with last summer's launch of the iPhone 3GS, leaving Palm's prospects uncertain. Cloud computing failures the company suffered through last fall only made things worse.
The only hope for Palm has been the idea that an established manufacturer would buy it and continue to invest in developing its novel smartphone operating system. HTC and Lenovo were considered frontrunners, but HP's purchase makes sense given that company's failed efforts to develop a strong presence in the smartphone category.
HP is a long term partner of Microsoft, but has seen little traction for its PDAs and smartphones based on Windows Mobile. Backed with a motivated, moneyed partner, Palm's webOS may be able to gain a significant profile that will make it a serious competitor to Android, Symbian and the upcoming Windows Phone 7 in their efforts to rival the iPhone and RIM's BlackBerry.
HP has never managed a significant software platform of its own, so the departure into becoming an integrated hardware and software company like Apple and RIM rather than just another device maker licensing other vendors' software like Dell or HTC will be a new role for the company.
Comments
A crapware PC maker joining with a has-been smartphone company.
What half-assed products await?
Too late to the smartphone party and a crowded market.
HP will lose on this deal, but HP is planning on taking Apple´s place in the market, so they need a phone.
I think Rubenstein knew of HP intentions working at Apple and all and why he was tapped to beef up Palm. Plus he could cockroach iTunes too.
Hopefully though Rubinstein will be allowed to pursue to revamp its product given that the palm unit will now have more resources! How about bringing that WebOS operating system to HP Slate! That will be useful, than putting that crappy-ass MSFT product. At least WebOS has been built with touch in mind, just like iPhone OS (and consequently adapted for iPad)
Excellent!
A crapware PC maker joining with a has-been smartphone company.
What half-assed products await?
Simple. 55 different versions that are nearly identical except
that every part was sourced from multiple vendors requiring
people that want a software or firmware update to Wade thru
5 bazillion (technical term) pages to find the right update that might work.
Sounds both simple and enjoyable, yes?
Palm's under new ownership but HP is isn't the company that's going to revive them and make them compete. HP has the finances but lacks the chutzpah and marketing savvy.
A year from now when HP Palm division starts to catch their wits ...iPhone, RIM, Android and WinMob will be light years ahead.
Palm webOS and iconic products
Iconic? Are you serious? This never ending chase for sensationalism is destroying the meaning of perfectly good words. Iconic my foot!
I can't see HP, even with the cash they have, likely to revive that dodo.
HP is a $120 billion dollar company. Palm has a ton of IP and engineering talent. This is a very, very smart move for HP. They are paying straight cash.
Let's not hate before even a single device is even realized to the public. I sense some fear among those die-hard iPhone OS folks... An open tablet from HP with webOS with TRUE multi-tasking...? Wow.
Let's not hate before even a single device is even realized to the public. I sense some fear among those die-hard iPhone OS folks... An open tablet from HP with webOS with TRUE multi-tasking...? Wow.
The "true" multitasking comment made me chuckle. But like I mentioned above, the Slate sounds more tempting with WebOS vs the alternative.
And Apple fans have NOTHING to fear.... Apple has no shortage of intellectual property or talent, not to mention a stockpile of money.
The HP Slate sounds more tempting with WebOS, in my opinion.
Yes it does! That is the first thing I thought of. Might be the first really good competitor to the iPad.
It's funny that certain niche message boards for certain fans tend to have the same quick to the punch attitude about things. Reading the Appleinsider comments here I see we have a bunch of MBA's and Strategy consultants who already know this is doomed before a single share has been bought.
HP is a $120 billion dollar company. Palm has a ton of IP and engineering talent. This is a very, very smart move for HP. They are paying straight cash.
Let's not hate before even a single device is even realized to the public. I sense some fear among those die-hard iPhone OS folks... An open tablet from HP with webOS with TRUE multi-tasking...? Wow.
Then you get the people that place too much emphasis on one aspect of a device (true multitasking). I think it's great that WebOS has financial backing now. Hopefully we will get to see how good it really can be. This can only be good for mobile operating system development as a whole.
The HP Slate sounds more tempting with WebOS, in my opinion.
I agree, that would be an interesting development.
This actually seems to be a relatively sensible move on behalf of both companies. Competition for Apple is a good thing, since it push them to ever greater things. In the same respect, I'm pleased Windows 7 is actually not that bad, since Apple will have to keep focus on making OSX better and better.
Yes it does! That is the first thing I thought of. Might be the first really good competitor to the iPad.
That's the first thing I thought, too. And I'm positive HP would beat Apple's price points.
Competition is awesome. I hope HP pulls out all the stops on this one, not because I want a Slate, but because I want an even better iPad experience.