Mobile

Palm is up for sale, taking offers this week, says Bloomberg

Smartphone maker Palm has put itself up for sale and will begin fielding offers from buyers this week, sources close to the matter tell Bloomberg.

The news follows dire quarterly earning reports in March that dropped Palm’s stock down to $3.75 — its lowest point in the past year, after hitting a $17.75 peak in September. Palm’s stock jumped 32 percent last week with rumors that computer-maker Lenovo and cellphone manufacturer HTC were eying the company for purchase. Now we’ve learned that those rumors are true, and that Lenovo and HTC may make offers soon.

Palm is working with Goldman Sachs Group Inc. and Qatalyst Partners to find a buyer. Dell has apparently also looked into the company, but passed on making an offer.

When Palm announced the Pre at CES 2009, there was genuine excitement surrounding the product because it was the first recent smartphone to actually best the iPhone in many ways — due in large part to Palm’s revolutionary WebOS software. But that same hardware doesn’t shine as brightly now when compared to recent Android phones like the Motorola Droid or Nexus One, or even the iPhone 3GS. Palm’s recent Plus upgrades to the phones for Verizon have sold poorly, and now the carrier is offering the smartphones at a major discount.

Both Lenovo and HTC are interesting choices for buyers. Lenovo is already familiar with absorbing and continuing another company’s brand. It purchased the ThinkPad brand from IBM and has (for the most part) kept up the brand’s previous reputation of reliability, while also modernizing it. It also paid $200 million in January to purchase Lenovo Mobile Communication Technology Ltd. — a mobile unit that it originally sold in 2008.

HTC could use WebOS with its own well-regarded hardware — although I’m sure such a purchase would be thorny for HTC, since it’s also the go-to handset maker for Google’s Android operating system. The Nexus One, MyTouch 3G, and the first Android phone, the G1, were all built by HTC.

We’ve also covered why Blackberry-maker Research in Motion is an ideal choice for gobbling up Palm. Much like HTC, RIM could benefit greatly from WebOS — and it’s likely much more desperate for a modern mobile operating system than HTC. RIM has ruled the smartphone realm for the longest time, but it’s done a poor job of competing with the latest generation of smartphones with its inability to modernize its OS. While it would certainly be confusing for RIM to juggle both the Palm and BlackBerry brands, it wouldn’t be that difficult for RIM to eventually outfit WebOS with the email and enterprise features its customers adore.

Palm currently has a market value of $870.8 million, and given its rate of poor sales so far, it certainly won’t be able to hold out for much longer. Short of a miracle hardware release (not likely, and it already had that shot with the Pre), Palm’s only choice now is to be bought out.

The only question is, who is brave enough to resuscitate the company?

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