Rumor Redux: Nokia expressing interest in Palm
Wall Street is at it again, with the rumor again circulating that Finnish smartphone maker Nokia is interested in buying Palm. The news, as well as Sunday’s impending launch of the Palm Pixi, drove up shares of PALM $0.95 (8.30%) in the day’s trading, closing at $12.40. The jump ended a less than stellar week, with Palm stock up 9.54% from Monday. During the same one-week period the NASDAQ technology exchange was up 2.62%.
Analysts have been generally positive on the Pixi and believe that it will sell well like the Centro before it. Unlike the $150-$200 range in which the Pre competes; there are few true contenders in the $100 bracket in which the Pixi will launch.
As some analysts have pointed out, it would make little sense for Nokia to be looking at Palm. Nokia just launched their flagship N900 handset with the brand new Maemo operating system. Maemo has been a rather significant investment for Nokia and is expected to power more and more of their smartphones over the stalwart Symbian OS.
Additionally, while Nokia has not done well in the United States, and are loosing marketshare overseas, globally Nokia is still the dominant smartphone maker, easily overshadowing Apple and Research in Motion in terms of sheer volume. While getting a better foothold in the USA is a goal of Nokia’s, to do so by purchasing Palm would be a multi-billion dollar venture.
With 142 million shares on the stock market and another 1/3 of the company owned by Elevation Partners, at today’s 12.40 closing price purchasing Palm would easily cost at least $2.7 billion. Factor in future earning valuations and a takeover bid could easily balloon to close to $4 billion. While Nokia has that kind of money (last summer they sunk $8.1 billion into buying Navteq), Palm would require further significant investments in marketing and development and it would take several years before Nokia would see any profits from the acquisition.
Is Palm for sale? Probably not, but as with any company if somebody were to make an offer there’s a price where Palm’s board would have no choice but to say yes (lest they face the wrath of angry shareholders). Based off of most analyst predictions and price targets, the purchase price of Palm is going to keep going up, so if somebody were to buy Palm, the time to do so would be now.
Thanks to spectre686 for the tip!