Palm Said To Hire Banker, Explore Sale
Published on: 4th Mar 2007
Note -- this news article is more than a year old.
WASHINGTON (Dow Jones) Palm has reportedly hired an investment banker to help the wireless device maker explore a potential sale.
The Wall Street Journal reported Monday that Palm is working with Morgan Stanley to evaluate its options, citing "people familiar with the matter." Possibilities could include a sale to Finnish mobile giant Nokia or a private-equity firm.
Last week, the Web site Unstrung, published by the popular online media company Light Reading, also reported that Nokia and was a top candidates to acquire Palm. Palm has been viewed as a buyout target for years.
Shares of Palm jumped nearly 11% on Friday on renewed speculation that the company is entertaining buyout offers. The company has been the subject of repeated takeover talk, pushing shares of Palm up nearly 30% over the past month.
On Monday, however, Palm stock fell more than 3% in premarket trades after J.P. Morgan cut its rating to underweight from neutral, saying the product line has grown stale while the competition is increasing.
Palm officials could not immediately be reached. A Nokia spokesman declined to comment.
The move by J.P. Morgan underscores the problems faced by Sunnyvale, Calif.-based Palm. The company is increasingly viewed as a takeover target because of its smaller size in a market where competition is rapidly increasing.
Palm felt the squeeze in its most recent fiscal second quarter, when revenue fell almost 12% and the vendor issued a weaker sales forecast.
Nokia, Motorola and BlackBerry maker Research In Motion have all unleashed sharp-looking new smartphones that have blunted Palm's historic edge in device design.
And soon, technology bellwether Apple will enter the smartphone market with the much heralded iPhone, which is based on snazzy touchscreen design.
Smartphones combine the features of a cell phone, personal organizer, Internet access and e-mail in one hand-held device.
Despite the stiffer competition, Palm is still a key player in the smartphone market and some rivals would be eager to acquire the company's expertise and raft of strong-selling models such as the
Indeed, shipments of Palm devices grew more than expected in the second quarter, topping 603,000 units.
While the most recent speculation centers on Finnish wireless giant Nokia, earlier rumors focused on U.S. mobile behemoth Motorola.
Palm could fetch up to $20 a share, Unstrung said last week, citing "sources close to Palm and investment bankers familiar with the deal."
(END) Dow Jones Newswires"