Palm Stock Soars On HTC Takeover Rumors
Jay Yarow | Apr. 9, 2010, 10:41 AM
Silicon Alley Insider
Palm's shares are up 8% today spiking on rumors that HTC is looking to acquire it.
A Taiwanese publication started the rumor mill going last night saying "HTC has started assessment of work, from the legal, financial, brand marketing and research and development at all levels to assess the feasibility of the acquisition strategy for Palm."
HTC says it doesn't comment on rumors or speculation.
At first blush, it appears to be an unlikely match. HTC has attached itself to the Google Android rocket, so it wouldn't have much need for the Pre, Pixi, or Palm's WebOS.
However, there's some logic to the deal, considering Apple is suing HTC. It would be one heck of an offensive move from HTC to protect itself.
Here's our best guesses for why it might happen:
Palm still has a fat portfolio of patents. Apple is suing HTC, claiming patent infringement, because it implemented certain touch gestures that Apple says it owns, like pinch and zoom. Palm has the same feature in its WebOS, but Apple didn't go after Palm, in part, because Palm still has a big portfolio of patents. HTC does not have the same sort of portfolio, so it can't fight back. If HTC owned all those patents it could counter sue Apple.
Palm is a better known brand. HTC is rebranding itself to be a better known brand in the US. It could struggle with that, or it could adopt the Palm moniker. While Palm's status is slightly down, it's still better than HTC.
Jon Rubinstein is still viewed as a stud. And so are a lot of other people at Palm. Buying Palm gives HTC a bunch of big brains and talent.
Palm is cheap. It's market cap is just $850 million or so as of this writing. Analysts think it's worth zero. HTC has $2 billion in cash and almost no debt.
Palm's shares have risen 50% since Wednesday when reports surfaced that Lenovo was interested in Palm. Lenovo is more logical fit for Palm since Lenovo doesn't have much of a mobile footprint. It's unclear if Lenovo has the cash to buy Palm though, says Rich Smith at the Motley Fool.
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