Unstructured Finance

Palm looking for an old China hand?

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.

Pricey Palm attracts attention

If you want to take a bite out of Apple’s piece of the staggeringly huge (but difficult to quantify in $$$ terms) smartphone market pie, you’d better either have the magical new “thing” or be willing to spend to buy it.

As Anupreeta Das reports, Palm – one of the stalwart originals in the mobile handset space — has remade itself into a terrific target with the success of its Pre. Palm’s stock got a jolt this week on talk that Nokia could be considering a bid. But as she explains, Palm may prove to be too pricey a purchase, even for those with deep pockets.

Since introducing the Pre, Dell, Microsoft, Nokia and Motorola have been mentioned as possible suitors. If one of these cash-rich companies was to bid for Palm today, it would be targeting a stock that has quadrupled this year. Complicating matters, “details on how many units it has sold are skimpy, making it difficult to value the success of Palm’s turnaround story,” she reports.

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