Palm Inc. a pioneer in the smart phone business that couldn't quite make the comeback it needed, has agreed to be bought out by Hewlett-Packard Co. for about $1.4 billion in cash.
The two Silicon Valley companies announced Wednesday that the deal will see HP pay $5.70 for every Palm common share and certain preferred shares. Also included in the $1.4 billion price tag are payments for additional preferred shares, warrants and employee restricted stock units.
Counting Palm's cash and debt, HP's offer values the company at $1.2 billion.
Palm had closed trading Wednesday at $4.63 but traded as high as $18.09 in the past 52 weeks.
Palm was founded in 1992 by Donna Dubinsky and Jeff Hawkins and helped originate the handheld computing market with its Palm Pilot "personal digital assistants" in the 1990s. But after Palm reshuffled itself repeatedly -- it was bought by U.S. Robotics, a modem maker that itself was bought by 3Com Corp. in 1997, and then spun off again as its own company in 2000 -- other companies took control of the market.
In recent years, as handheld computers morphed into "smart phones," Palm struggled to keep up as consumers flocked to such devices as Apple Inc.'s iPhone and Research In Motion Ltd.'s BlackBerry. In the past year, phones that use Google Inc.'s Android operating software have added new competition.
Palm got itself into position for a turnaround last June, when it released a sleek touch-screen smart phone called the Pre and fresh operating software for it that won good reviews. But consumers were slow to embrace the Pre and its newer, smaller sibling, the Pixi. In the most recent quarter, Palm sold just 408,000 phones. In its last quarter Apple sold 8.75 million iPhones.
And its current quarter is looking bleaker: On Wednesday, Palm lowered its forecast for the three-month period that ends in May, predicting in a regulatory filing that it will report $90 million to $100 million in revenue due to sluggish phone sales. It previously predicted less than $150 million in revenue.
View article on one page