Peter Kafka

Recent Posts by Peter Kafka

Palm Folds, Goes to HP For $1.2 Billion

Hewlett-Packard (HPQ) will pay $5.70 a share for Palm (PALM). CEO Jon Rubinstein “is expected to remain with the company”. Here’s the release. [Update: Here’s a link to the liveblog of Palm and HP’s conference call to explain the deal.]

Why would a Palm-HP combo work? In part, because no one else seemed to want the battered smartphone company. But there are other reasons to justify the deal. Which Digital Daily’s prescient John Paczkowski laid out last week:

How about Hewlett-Packard? With handheld sales that fell by more than half year-over-year in its first quarter, HP is surely looking for a way to revive them and capture a larger portion of the important mobile market. Acquiring Palm could be a good way to do it. Here’s why:

  • Yes, HP is a Windows shop with, no doubt, big plans for Windows Phone 7, but that OS will likely figure in devices aimed at the enterprise market. With Palm’s assets, HP could target the consumer space as well.
  • Palm’s webOS is scalable. HP could use it in other devices/tablets, for example–-differentiating them from those of competitors using open-source operating systems like Android.
  • In Palm, HP would gain a turnkey smartphone division–a venture with a slick smartphone OS, a deep mobile patent portfolio, a talented R&D team, the beginnings of an app ecosystem and established carrier relationships.
  • Palm and HP both call Silicon Valley home, and former Palm exec Todd Bradley currently heads up HP’s Personal Systems Group. Obviously, there would still be integration risks, but there are clear synergies in culture and location that would at least temper them a bit.
  • HP has some $14 billion in cash on hand, more than enough to cover Palm’s rumored $1.3 billion asking price with plenty left over.

Palm and HP will hold an conference call at 5pm eastern to go over the deal. Here’s a link to the liveblog of Palm and HP’s conference call to explain the deal.

Latest Video

View all videos »

Search »

There’s a lot of attention and PR around Marissa, but their product lineup just kind of blows.

— Om Malik on Bloomberg TV, talking about Yahoo, the September issue of Vogue Magazine, and our overdependence on Google