Editor’s Note: The following article is reprinted from Network World.
Struggling smartphone maker Palm is reportedly looking for buyers. If true, it could signal that the company and its investors have given up the effort to re-launch the pioneering mobile device manufacturer.
Palm is working with Goldman Sachs Group and Quatalys Partners to line up a buyer, according to Bloomberg sources, who said HTC in Taiwan, and Lenovo Group, in China have “looked at the company.”
One technology analyst suggests that Palm has little to offer some of the rumored buyers, and that the smartphone company is more likely to end up being bought by a smaller Chinese or Indian device maker looking for dramatic gains in home and international markets.
“What does Palm bring to the table that HTC and LG don’t have?” asks Jack Gold, principal of J. Gold Associates, a technology research and consulting firm. “Palm has limited channels and a diminishing customer base.”
ZTE or Huawei are more likely buyers, he says, because they “leverage both the Palm brand and its technology for both domestic and international market expansion (they already have phone operations domestically and are trying to expand worldwide).”
Palm’s main investor is Elevation Partners, with 30 percent of the stock, a big investment betting that webOS and phones such as the Palm Pre and Palm Pixi would re-launch what had once been a successful brand. But Palm’s most recent earnings were disappointing, with the company shipping far more phones than Sprint, and more recently Verizon, were actually selling, even with big price cuts.
Palm CEO John Rubenstein recently said that if the company had placed the original Palm Pre, which went on sale in June 2009, with Verizon before the carrier launched the Android-based Droid phone from Motorola, Palm’s prospects would have been dramatically different.
By late September 2009, the stock price had reached its highest point, $17.39, but then began sliding steeply. At day’s end Friday, April 9, it stood at $5.16 per share.
The low price could attract someone else who was either looking to turn around the company, or to use webOS as the basis for its own mobile platform play. The latter plan would mean continuing the competition with the successful Apple iPhone, Research in Motion’s BlackBerry, the growing presence of Android-based phones, and Microsoft’s re-energized Windows Phone 7 OS. Currently, RIM and Apple are the U.S. market share leaders, with nearly two-thirds of the market between them, according to Gartner. Palm has less than 5 percent share.
According to Bloomberg, Palm, Lenovo, HTC, and both Goldman and Qatalyst declined to comment.