DealZone

Palm looking for an old China hand?

April 13, 2010

Our report that the money-losing smartphone maker went to China in February in an attempt to sell itself to telecom/tech titan Huawei Technologies makes perfect sense. The mystery is that the talks appeared to go nowhere. Huawei and ZTE, the two big Chinese telecom equipment makers, both have money and ambition and would only be helped by a well-known brand like Palm, right?

Unfortunately, Palm is currently well known for being the laggard behind Apple and RIM, so any buyer will have to have a sensible plan for revitalizing the brand against two of the best in the business. But if Huawei and ZTE are holding out for a better brand, they could be in for a long wait. Palm may not be number one, but it is still a premium brand in a shark-infested marketplace.

After a big run-up on takeover speculation, the stock has fallen back as investors start to expect a take-under – meaning whatever price a buyer does come up with will not match the market’s heady expectations.

Palm has been considered a target for larger companies hoping to enter or expand in the mobile market for years. Based on recent deals in the technology sector, it might get $1.3 billion, given its current $1 billion market capitalization and the 30 percent premium recently paid in tech deals. But analysts tell us that even this might be a rich assumption.

Post Your Comment

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/