Bloomberg confirms Palm up for sale, HTC interested

gavel_auction Bloomberg has managed to confirm speculation that Palm is looking for a bidder. Their sources told them the company is working with Goldman Sachs Group Inc. and Frank Quattrone’s Qatalyst Partners to seek buyers, and that Lenovo, who recently re-entered the handset market, and HTC were interested. Dell has apparently already taken a pass on the offer.

As before, all parties involved declined to comment, but Bloomberg’s sources suggest the process may start as early as this week.

The two different buyers likely offer two very different fates for the Sunnyvale company.  Under Lenovo its likely most of the company structure will remain intact, and the operating system will see wider distribution on more handsets, as Lenovo uses the company’s carrier relations and smartphone expertise to seek a foothold in the western market.

On the other hand the Palm company itself does not have much to offer HTC, which already has great expertise in both hardware and software, and better carrier relationships than Palm.  Even the value of Palm’s brand name has suffered recently, after a disastrous advertising campaign last year.

While many would like the webOS to live on under HTC, the likelihood is that HTC is buying the company mainly as an insurance policy against being sued to competitors for patent infringement.  While some may say that this move is rather expensive at the likely sales price of $1 billion, half of HTC’s $4.55 billion 2009 revenue came from USA, and the company would suffer greatly if it sales were blocked there.

WebOS handsets have also been poorly received in the market, with more than 1 million handsets  believed to be sitting on shelves waiting for buyers. The company has not seen a profit for more than 11 quarters, and is expected to burn through $150 to $200 million during its current quarter, between $1.5 to $2 million dollars per day. Keeping the company going as a viable entity will therefore likely be a case of throwing good money after bad and be much more expensive even in the short term.

Do our readers think a Palm acquisition by HTC would be a good idea? Let us know below.


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