HP to Acquire Palm for $1.2 Billion

Posted By: Ryan Kairer Wednesday, April 28, 2010 1:15:26 PM

hp palm HP and Palm, Inc. today announced that they have entered into a definitive agreement under which HP will purchase Palm, a provider of smartphones powered by the Palm webOS mobile operating system, at a price of $5.70 per share of Palm common stock in cash or an enterprise value of approximately $1.2 billion. The transaction has been approved by the HP and Palm boards of directors.

The combination of HP's global scale and financial strength with Palm's unparalleled webOS platform will enhance HP's ability to participate more aggressively in the fast-growing, highly profitable smartphone and connected mobile device markets. Palm's unique webOS will allow HP to take advantage of features such as true multitasking and always up-to-date information sharing across applications.

"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."

"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.

Audio webcast
Today at 5 p.m. ET / 2 p.m. PT, HP will conduct a live audio webcast for financial analysts and stockholders to discuss HP's agreement to acquire Palm. The webcast will be hosted by Todd Bradley and is accessible at www.hp.com/investor/webcast.

Source: HP & Palm Inc. Press Release.

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Jaw still dropped

questionfear @ 4/28/2010 1:19:20 PM # Q
I am SHOCKED.
Reply to this comment

I want to see the financial details released soon

SeldomVisitor @ 4/28/2010 1:20:03 PM # Q
The price, $5.70 is well below Elevation Partner's original purchase as well as their $16.25 purchase; I want to see how this is going to be handled.

[I think paying a billion+ for what Palm has to offer is nuts; I want to see HP's justification for that, too, of course...but Palm s supposed to be filling some new info this afternoon]

RE: I want to see the financial details released soon
SeldomVisitor @ 4/28/2010 1:49:24 PM # Q
Palm filed some minimal information - they were on the way to a massive miss:

== "...The Company expects revenues for its fourth fiscal quarter to be in the
== range of approximately $90 million to $100 million on a GAAP ( 1) and a
== non-GAAP basis..."

and they did indeed expect to burn up $200+ million this quarter:

== "...Palm also expects to close its fourth fiscal quarter with a cash, cash
== equivalents and short-term investments balance between $350 million and
== $400 million..."

They still have to say how the Preferred shares are going to be handled.

RE: I want to see the financial details released soon
2klbs @ 4/28/2010 2:00:05 PM # Q
Was just going to post that. 'shoulda known you were there first SV-

Youch.

http://investor.palm.com/secfiling.cfm?filingID=1193125-10-96703
Not "Pre-verted"- Android Assimilation?

RE: I want to see the financial details released soon
2klbs @ 4/28/2010 4:43:48 PM # Q
SeldomVisitor wrote:

They still have to say how the Preferred shares are going to be handled.

SV, saw this at MW a bit earlier, no indication of methodology though:

Elevation, the private equity firm which invested about $460 million in Palm, is estimated to have made a very small profit on the Palm deal. At the price H-P is paying for Palm, Elevation's stake, including convertible preferred shares and warrants, was estimated as worth about $485 million
Not "Pre-verted"- Android Assimilation?

RE: I want to see the financial details released soon
2klbs @ 4/28/2010 4:50:22 PM # Q
Better one from WSJ Blog:

http://blogs.wsj.com/deals/2010/04/28/elevation-partners-squeezes-tiny-profit-from-palm-investment/?mod=WSJ_latestheadlines
Not "Pre-verted"- Android Assimilation?

RE: I want to see the financial details released soon
SeldomVisitor @ 4/28/2010 5:16:53 PM # Q
The problem is that the "small profit" "article" didn't address the fact that the Preferred shares are =preferred= and theoretically get theirs FIRST before common shares get theirs. This screws up the whole "How much per share are common shareholders REALLY going to get?" computation. I think Palm is going to have to come clean soon with the REAL bottomline dollar amounts - either the total buyout price has to be MUCH higher than HPQ said or the price per common share has to be LOTS LOWER than was announced.

But something simply is not computing with the current numbers.

Reply to this comment

Good move!

CFreymarc @ 4/28/2010 1:30:21 PM # M Q
Brilliant "rook across the chessboard" move. Windows Mobile is lacking and HP wants into smartphones big. With the webOS they have a lot more control over their OS than from Redmond. A few long time Palm employees are little millionaires now. Congraduations!
RE: Good move!
gabvoice2 @ 4/28/2010 7:08:12 PM # Q
Deep-pocketed HP will grow muscles on the new kid WebOS, and immediately expand this platform through its well established hardware infrastructure. Good move indeed!
RE: Good move!
LiveFaith @ 4/28/2010 8:46:58 PM # Q
Will Palm now become the next Compaq. Will HP work the same magic on the Pre that they did on the mighty iPaq? Please ... may it never be. I hope they learned from the last destruction of IP.

Nevertheless, this to me looks like a much better fit for Palm than the other names being thrown around lately. Amazing. Todd Bradley back in the saddle too.
Pat Horne

Reply to this comment

enemy of my enemy and all that

2klbs @ 4/28/2010 1:32:28 PM # Q
Thanks goodness people hate M$.

What a rabbit to be pulled- good for Palm, and good luck to HP.
Not "Pre-verted"- Android Assimilation?

Reply to this comment

Brilliant match!!

mikecane @ 4/28/2010 1:34:19 PM # Q
Really, this is better than Asus. hp has shown seriousness in the portable market from the time of its original Flash-based handheld computer (I forget its name; it had a cult following) and that mini-laptop (which name also escapes me right now, dammit; it had that funky slide-out mouse), so this is really a perfect match.

Now, how fast can hp rip Win7 off that Slate and give us webOS?

RE: Brilliant match!!
rpa @ 4/28/2010 5:23:29 PM # Q
mikecane: the mini-laptop you are thinking of is the HP Omnibook?
RE: Brilliant match!!
LiveFaith @ 4/28/2010 8:51:10 PM # Q
Here's the deal HP: Keep your hands OFF the software and let Palm do that. Every HP product that I have ever owned has the most utterly horrendous non-intuitive, unstable, and bloated software of anything I've seen this side of the cell carriers. Just let the boys and girls from Cali do their thing and you get us some HTC style hardware to run it on.
Pat Horne
RE: Brilliant match!!
mikecane @ 4/29/2010 6:23:08 AM # Q
Yeah, the OmniBook was it. I looked it up later on.
RE: Brilliant match!!
mikecane @ 4/29/2010 4:58:21 PM # Q
>>>Every HP product that I have ever owned has the most utterly horrendous non-intuitive, unstable, and bloated software

Oh, I just saw that. My god!! The hp printer software I must use is utter crap!! AND it installed itself TWICE and I can't get rid of the damned duplicate.

RE: Brilliant match!!
LiveFaith @ 4/29/2010 7:44:16 PM # Q
Yep. As long as that "HP Software Group" in the division chart keeps it's distance Palm may have a chance. Let those foos anywhere near and it's a Windows Me remix.
Pat Horne
Reply to this comment

There is hope for WebOS yet!

zuhmir @ 4/28/2010 1:54:16 PM # Q
I still don't understand why Palm never offered people from around the world to buy the Pre... It's only a matter of releasing a list of compatible networks around the world and maybe localizing the device... no big deal.
But HP is already global so I hope they will just boost a worldwide sale!
RE: There is hope for WebOS yet!
e_tellurian @ 4/28/2010 6:59:07 PM # Q
The planet is huge and more and more countries can make electricity so the market should open up. Agree not sure why Palm did not offer their products to more countries. SFR had good things to say about Palm.

"Frank Esser, SFR chairman and chief executive officer, said, "SFR is extremely proud to be the first operator to launch Palm webOS smartphones in France. This alliance comes within the scope of our strategy to provide the best user experience for mobile Internet and the widest range of smartphones to our customers"

Such support for Palm is priceless. Am sure others will share the same sentiments around the planet.

E-T
e-tellurian

Completing the e-com circle with a people driven we-com solution
WiFi & BT? No strings attached
http://translate.google.com/#en|fr|

RE: There is hope for WebOS yet!
jodihansen @ 4/28/2010 7:40:53 PM # Q
Yes, I agree. I am in Australia and have an iPhone now, but only because the Pre wasn't available here. It was CDMA and not GSM which is needed over here. I know that GSM ones are now available on eBay but I got a new iPhone before they were available. I am still interested in getting a Palm Pre Plus, but are in a contract until July 11th.
I hope that HP make WebOS devices available world-wide with the same launch date everywhere. If Palm had of done this with the Pre then I would have one.
Reply to this comment

OMG! Old Palm Bought New Palm!

mikecane @ 4/28/2010 2:31:22 PM # Q
I just read the post and saw this:

>>>"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.

Hello, Todd Bradley!

Palm Chooses Head of Hardware Development
Palm, Inc. has just named Todd Bradley as president of its Palm Solutions Group.
http://www.palminfocenter.com/comments/3401/

Palm Inc Acquires Handspring
>>>The merged company will be led by Bradley, who will continue as president and chief executive officer
http://www.palminfocenter.com/news/5479/palm-inc-acquires-handspring/

OMG!

RE: OMG! Old Palm Bought New Palm!
Ryan @ 4/28/2010 3:06:24 PM # Q
I half expected this sort of outcome. Many of the "old Palm" vp's and marketing people that I used to work with all moved to positions at HP years ago, so there was a lot of back and forth between the two companies already.

Bradley ran Palm as CEO back in the pa1mOne days and long before the spin off of PalmSource. I believe he was put in charge following Yankowski from 2001 until 2005 when Colligan took over.

http://www.palminfocenter.com/view_story.asp?ID=7521

RE: OMG! Old Palm Bought New Palm!
mikecane @ 4/28/2010 3:23:45 PM # Q
Banging my head on my desk because I never, ever considered this. In retrospect, it's just frikkin natural. A much better fit than Asus would have been.
RE: OMG! Old Palm Bought New Palm!
2klbs @ 4/28/2010 3:38:19 PM # Q
wow, memories, and there are other parallels.

Todd left as the PDA share began to fall off and Ed had been put in charge of the mobile-pone side. With the success of the Treo from the Handspring acquisition, Ed was in the right place at the right time.

Weird to think of the similar picture: Then: Palm throwing their lot behind a new smart-phone from a company acquisition that set it apart as their core product declined. HP in similar situation now with computing products.

http://www.networkworld.com/news/2005/0124updat-pal.html
Not "Pre-verted"- Android Assimilation?

RE: OMG! Old Palm Bought New Palm!
Ryan @ 4/28/2010 4:00:49 PM # Q
How's this for more parallels? HP recently bought 3com.
RE: OMG! Old Palm Bought New Palm!
hkklife @ 4/28/2010 4:27:21 PM # Q
Now they just need to pick up the remnants of USR and everyone will have come full circle!

I hope HP has an opening for Hawkins & Haitani as well!
And the tap counter too!
Pilot 1000->Pilot 5000->PalmPilot Pro->IIIe->Vx->m505->T|T->T|T2->T|C->T|T3->T|T5->Zodiac 2->TX->Verizon Treo 700P->Verizon Treo 755p->Verizon Moto Droid + Verizon Palm Centro

RE: OMG! Old Palm Bought New Palm!
mikecane @ 4/28/2010 5:16:59 PM # Q
Someone reminded me that hp also bought 3Com. Wow. That's just wild.

I really hope this move by hp gets devs excited and really ramps up webOS development.

And, btw, ePub books can be read on webOS right now:

ePub Books On webOS
http://ipadtest.wordpress.com/2010/04/28/epub-books-on-webos/

AFAIK, there is no app to do this on webOS (and Aldiko seems disinclined to port to webOS from Android, no matter how many times I've told them to).

RE: OMG! Old Palm Bought New Palm!
hkklife @ 4/28/2010 5:52:00 PM # Q
Mike;
Does today's move influence your new hardware acquisition plans at ALL?

Are you still springing for a 3G-enabled iPad?

Any chance of you picking up a "free" WebOS device in order to familiarize yourself with the basics of WebOS prior to the first "real" HP hardware running WebOS?


Pilot 1000->Pilot 5000->PalmPilot Pro->IIIe->Vx->m505->T|T->T|T2->T|C->T|T3->T|T5->Zodiac 2->TX->Verizon Treo 700P->Verizon Treo 755p->Verizon Moto Droid + Verizon Palm Centro

RE: OMG! Old Palm Bought New Palm!
jca666us @ 4/28/2010 6:04:21 PM # M Q
HP definitely overpaid - however they may be looking to use webos to differentiate their product offerings - in the same way apple uses os-x, and iPhone os.

Only thing is, I hope HP doesn't force Palm to rush stuff out to market. They need to give Palm the time to beef up webos.

HP builds pretty solid, but unimaginative, hardware.

Hopefully we'll see a webos-based slate device next year.

RE: OMG! Old Palm Bought New Palm!
abosco @ 4/28/2010 7:28:02 PM # M Q
Palm is now in front of some deep, deep pockets. With all of the bullshit M&A finally (hopefully) put to bed, the company can focus on engineering.

I wonder what HP's tolerance for Palm will be as a profit/loss center. If they are not profitable within the next 18 months, do they have a plan? Can they swallow a few hundred million?

Also, I figure that the $1.2B isn't being paid in cash. I imagine some stock changed hands.

RE: OMG! Old Palm Bought New Palm!
LiveFaith @ 4/28/2010 8:57:08 PM # Q
Tap Counter! It's gesture counter now foo!
Pat Horne
RE: OMG! Old Palm Bought New Palm!
mikecane @ 4/29/2010 6:24:53 AM # Q
Nothing has changed on my iPad front. But it has made me reconsider an iPhone later on. And I really, really, really want a webOS tablet.
RE: OMG! Old Palm Bought New Palm!
MikeT5 @ 4/29/2010 8:18:03 AM # Q
HP's acquisition of Palm (and its intentions for the division) prompted me to delay moving to another platform with my carrier, which I have been considering since my contract will soon expire. I have opted to give Palm one more chance, under the auspices of HP, and have puchased a new, backup Centro on eBay, as others also have done. I am adopting a "wait-and-see" attitude until I can test HP/Palm's new WebOS devices and architectures. Personally, I am willing to pay extra for higher quality materials in HP/Palm-branded hardware, provided there is a corresponding improvement in the implementation of WebOS. Based on in-store and other tests of the pre/pre plus and pixi/pixi plus, Apple, Android, and MS devices, I have found WebOS easier to use, particularly its multitasking and task-switching capabilities--though it remains to be seen what multitasking and task-switching will be like in upcoming offerings from the competition. Hopefully, HP/Palm will develop an in-house emulator, or work more closely with third-party developers to provide a better emulation experience, in multitasking the "best" of the 30-50k, or so, PalmOS apps that are still available in the palm ecosystem, perhaps allowing them to run side-by-side (recall "TealOS") with the new crop of WebOS apps that have been trickling into the marketplace. This ought to be done until the best of the old PalmOS apps are properly ported, natively, into the new OS. The limited stability of current emulation solutions, coupled with the additional time and steps needed to upgrade same just to use PalmOS apps in a partitioned "corner" of WebOS is 100% uncharacteristic of Palm "Zen," which has traditionally differentiated its platform from all others--including Apple's--in ease of use, flexibility, and customization. The extra effort in using palmOS apps in WebOs seems unnecessary and, until now, has prevented me from adopting/embracing WebOS. I offer these comments and suggestions as an end-user, not as a developer, who has happily relied on palm solutions since 1999, both in my clinical and applied work as a Ph.D. scientist and consultant, and as a PDA/smartphone consumer.
RE: OMG! Old Palm Bought New Palm!
mikecane @ 4/29/2010 3:25:34 PM # Q
Oh man, give up the Classic OS stuff. It's up the DEVS to port them to webOS, not up to Palm or hp to continue the legacy hassle. Use Classic for webOS -- that's as good as it will get. hp didn't pay money to bring back old code!
RE: OMG! Old Palm Bought New Palm!
MikeT5 @ 4/29/2010 4:03:50 PM # Q
You're probably right about the reasons why developers are reticent about using/exporting old palmOS code in WebOS devices. Still, I will hold-off switching to the new platform until HP/Palm has had the opportunity to retool its hardware/software in its new line of devices. Hopfully, by that time enough developers will have had the time to write their programs in native WebOS code, minimizing reliance on Classic--if, indeed, it remains the only viable emulation option. My comment, above, wasn't lamenting the loss of palmOS/apps, so much as the loss of "Zen" that has resulted in how those apps are accessed and used in Classic--not so tragic in the end, but a little inconvenient.
RE: OMG! Old Palm Bought New Palm!
mikecane @ 4/29/2010 4:56:48 PM # Q
Ah, yes, the Zen. Aside from calling up and using the Cards, there is hardly any damned Zen in webOS.

And having fondled hp's TouchSmart desktops, there's a serious lack of the ken of Zen on their end too!

Maybe Palm has been listening to all of the No Zen complaints and has a list list of things to fix and will get on them once the hp deal is all done.

Well, I can dream.

Reply to this comment

HP 200 LX

e_tellurian @ 4/28/2010 6:38:07 PM # Q
To some this unit revolutionized the way some did business and process corporate content into their work flow ... good memories.

HP is really going into its past knowledge with a new platform. HP has a strong history of building handheld devices.

Palm stays a North American pioneer with more thought from another pioneer in the handheld industry a good fit.

Good to know for those of us that do not speak Chinese that we can continue to think in a language we understand while utilizing translation technology to communicate with the planet.

Congratulation To HP and Palm.

E-T
e-tellurian

Completing the e-com circle with a people driven we-com solution
WiFi & BT? No strings attached
http://translate.google.com/#en|fr|

RE: HP 200 LX
richf @ 4/28/2010 7:11:17 PM # Q
This is great. I've had some super hp devices in the past and they were absolutely wonderful. Some of the hp stuff I loved-hp 38, hp 41, hp 70, hp 75. These computers were built like a tank and performed like an expensive swiss watch. Loved them.
Have a nice day!
Pilot 1000->Pilot 5000->Pilot Pro->IIIe->IIIc->M500->M505->M515->T3->T5->Treo 650P->Treo 700P->Droid
RE: HP 200 LX
e_tellurian @ 4/28/2010 7:58:44 PM # Q
Not only is there more capital for Palm also enthusiasm.

HP certainly has a great history with handhelds. The 200 LX was capable of doing all my corporate business. People at the firm i worked with were amazed at what that little computer could do for the quality and efficiency of my work. One could customize the fields in the day when we used forms. It made the work look very professional and was lucky the firm i worked with was so open minded and let me use my little 200 LX for my work. Even though i was the only one, they were very forward thinking.

In the future HP and Palm together will be very exciting as they have so much in common as pioneers in the handheld market.

E-T
e-tellurian

Completing the e-com circle with a people driven we-com solution
WiFi & BT? No strings attached
http://translate.google.com/#en|fr|

Reply to this comment

And suddenly I'm interested in Palm again

justauser @ 4/28/2010 7:19:46 PM # Q
With WebOS still far from Australian shores and by most reports almost dead, I switched to WM6 (and loved it I'm sad to say). So glad to hear Palm will live another day. Perhaps HP will speed a Pre2 to our little gadget starved country
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