Palm acts over talk of Asian takeover

Palm, the US handheld computing company that has been struggling to find a second act in the smartphone market, has hired outside advisers in a process that could lead to a sale of the company.

News that Palm had hired Goldman Sachs and Qatalyst Partners, a firm run by Silicon Valley banker Frank Quattrone, brought a 19 per cent jump in Palm’s share price on Monday, pushing the value of the company back above $1bn.

That continued a rebound that took hold last week as speculation swirled about a potential acquisition of the company, with Chinese PC maker Lenovo and Taiwanese smartphone producer HTC the latest rumoured bidders. Both Asian companies have expressed interest in exploring a possible acquisition but have not made offers, according to Bloomberg, which first reported the process.

Palm’s new banking advisers will look at all options for the company, including a sale as well as potentially seeking new minority investments for the company, said a person familiar with the process.

The decision to reconsider its position comes weeks after a make-or-break launch of Palm’s smartphones on the Verizon Wireless network flopped. A successful launch was seen as an essential step in Palm’s attempt to rebuild itself around a new set of phones built on its highly regarded operating system, WebOS.

A touch-screen platform for mobile devices that competes with Apple’s iPhone software and Google’s Android, WebOS has been viewed as Palm’s main asset since its launch last year. However, the company failed to capitalise on its technology, and the latest wave of competition in smartphones will make it harder for Palm to gain a strong foothold.

The latest version of the iPhone software, shown for the first time last week, will let users run multiple applications at once, a feature that was one of WebOS’s main advantages over the Apple device. Also, after being left behind, Microsoft is finally gearing up to become a player in touch-screen handsets with its latest Windows software.

Both Lenovo and HTC said they would not comment on rumours.

Lenovo, the world’s fourth-largest PC maker, has long said it was open to acquisitions. So far, the company’s interest appeared focused on potential targets in the PC industry.

However, analysts said that Lenovo’s new attention to mobile devices could change this. In a dramatic reversal of strategy, the company said late last year that it was buying back the handset unit that it had sold just 18 months earlier.

Acquiring Palm could help HTC compete with rivals by giving the smartphone maker its own mobile operating system, according to analysts.

Additional reporting by Kathrin Hille in Beijing and Robin Kwong in Taipei

Copyright The Financial Times Limited 2017. All rights reserved. You may share using our article tools. Please don't cut articles from and redistribute by email or post to the web.