Palm, a pioneer in what turned into the smart phone market, has hired Goldman Sachs and Qatalyst Partners to find a buyer, according to Bloomberg.
Leading candidates, Bloomberg reports, are Taiwan’s HTC and China’s Lenovo Group (LNVGY). Lenovo recently repurchased its former mobile phone business from the group of former employees who had bought the unit in 2008 when Lenovo decided to concentrate on computers.
Palm shares were up 16.7% as of 12:30 ET this morning, April 12. Shares rose 32% last week on rumors of a takeover bid. The stock had been down 60% for 2010 before the recent moves.
Palm, No. 6 in the North American smart phone market in the fourth quarter of 2009, had bet a turnaround on its new Pre and Pixi smart phones based on its new WebOS operating software. But sales have been disappointing. Big price cuts by Verizon (VZ)—the price on the Pixi Plus went to $29.99 and on the Pre Plus to $49.99—haven’t ignited sales. Last month the company forecast that it would report less than $150 million in sales for the quarter ending in May 2010. Wall Street analysts had been predicting $300 million.
Other potential buyers include Nokia, (NOK), and China’s Huawei Technologies and ZTE. Dell (DELL) has indicated that it has no interest in buying Palm.
I would think that the tide would lift RIMM because RIMM still has a nice boat. I still think the PALM boat has a hole in the hull. The May $5 put was up 63% today after going down for 2 days or so. I still think the call is to own AAPL and sell PALM…wouldn’t be confident to short RIMM at this point though.
lotteollie:
While RIMM may not perform as well as peers like AAPL, just remember that a rising tide lifts all boats. If you predict downside news that may move their market, sure. But the nicer things may look for those who are short, the greater the peril of the kind of short squeeze and hot-money action that recently lifted majoski’s PALM.
Jim,
Do you think anybody will actually buy PALM? Why would anybody want to invest in a company that is losing to AAPL and RIMM?
I have PALM puts that were doing great until the buyout rumors. Tempted to buy more puts.
Thanks,
Matt
this is too bad, i have been using their phone for 5 years, and i was really looking forward to update to the new one the Pre but they did not release it internationally.
lotteolie,
I’m no expert at shorting anything, but I wouldn’t take that bet with the possibility of some company buying RIMM. If that comes true RIMM is most likely at about its lowest value right now.
I am thinking of shorthing RIMM. Whatta think?