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Hp and Plam

In: Business and Management

Submitted By tempoleung
Words 2522
Pages 11
SM0374 – The Introductory Articles (2010-11/ Semester Two) Sources:
1. “Hewlett-Packard to buy Palm for $1.2 Billion” (Bloomberg news, 29th April, 2010)
2. “Actual Analysis: HP buys Palm, and the Earth does Move” (Betanews, 28th April, 2010)

Hewlett-Packard to Buy Palm for $1.2 Billion
By Connie Guglielmo and Ari Levy /Apr 29, 2010
Hewlett-Packard Co. agreed to buy Palm Inc., the money-losing handset maker that was once a Silicon Valley icon, for $1.2 billion to challenge Apple Inc. in the smartphone market.
Palm’s common shareholders will receive $5.70 a share in cash, a 23 percent premium over the closing price, Hewlett- Packard said in a statement today. Elevation Partners LP, Palm’s biggest investor, gets $485 million for its preferred shares and warrants.
The Palm deal moves Hewlett-Packard back into contention with the world’s biggest smartphone makers, including Nokia Oyj, Apple and Research In Motion Ltd. Hewlett-Packard’s current iPaq device hasn’t kept up with competitors. The company also gets a team headed by ex-Apple engineers and a Palm patent lineup that spans mobile hardware, software and power-saving technologies.
“This is a low-price, low-risk way for them to at least attempt to penetrate the smartphone market,” said Brian Alexander, an analyst for Raymond James & Associates Inc. He has a “strong buy” rating on Hewlett-Packard’s stock, which he doesn’t own. “We always wondered why they didn’t have much of a smartphone strategy.”
Palm’s shares, which closed at $4.63 on the Nasdaq Stock Market before the deal was announced, rose as much as $1.32 to $5.95 in extending trading, as some investors speculated another company may make a bid. Possible buyers include Nokia, said Shaw Wu, an analyst at Kaufman Brothers in San Francisco. Nokia spokeswoman Laurie...

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