Palm Potentially Open for Buyout or Merger
When Palm Inc. was spun off from 3Com in 2000, the IRS said the deal was tax-free as long as neither Palm nor 3Com bought or sold more than 50% of Palm's stock for two years. This meant that if a company bought Palm, they would have to pay all the taxes for distributing Palm's shares to 3Com shareholders in 2000, about $7 billion. In short, the deal would have been prohibitively expensive. However, that two year window was over earlier this week, which means a potential buyout or merger is now possible.
This doesn't mean that Palm will be sold or merge with another company; just that it could. Palm's CEO Eric Benhamou has said that the company isn't looking to make any such deal. Still, the final decision may be 3Com's, which still owns a majority of Palm's stock. However, Benhamou is also Chairman of the Board of 3Com, so it seems unlikely Palm would be sold without his blessing.
Though Palm's stock price has been slowly sliding this whole year and it recently announced plans to do a reverse stock split, financially the company isn't in all that bad a shape. It's products are still far and away the best-selling handhelds and it controls the Palm OS, which is on the vast majority of handhelds sold worldwide.
Though the company has reported a quarterly loss for most of the past year, it isn't anywhere close to being bankrupt, with $297 million in cash. It is hoping to return to profitability the last quarter of this year. So it won't be forced to sell out.
There are advantages and disadvantages to any buyout or merger, depending on what the exact deal is. A disadvantage to any such deal, however, is that it will distract Palm's managers at a critical time. One of the major reasons for the slow pace in development of Palm OS over the past several years is because the company's top management was distracted by having to deal with all the details of being spun off from 3Com and going through an IPO. Being acquired or merging with another company would also be a major distraction just at the time the pace of development is picking up again. Of course, Palm's executives are already being distracted by their plans to spin off PalmSource in the next several months.
Several candidates for merger or buyout have been frequently discussed in the past.
Rumors have been circulating for months that Palm and Handspring might merge. Both handheld makers have been struggling over the past year and a merger, handled properly, could reduce cut-throat competition and possibly allow the merged company to be profitable, which the separate companies are not.
Sony has been discussed as a possible buyout candidate. Buying Palm would give Sony control of the operating system on its Clié line. Sony's deep pockets could allow PalmSource to hire more developers and increase the speed at which operating system updates are released.
One company that would never be allowed to purchase Palm is Microsoft. A buyout would almost certainly bring about the end of the Palm OS in favor of Microsoft's Pocket PC and the FTC could only rule this to be anti-competitive.
Related Information:
- PIC: Rumors Continue About Palm/Handspring Merger (July 10, 2002)
- PIC: Palm Inc. Forum
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RE: Weren't we joking about this rumor awhile back?
RE: Weren't we joking about this rumor awhile back?
I guess we would all end up using Memory Sticks, too.
I'd seriously start looking at Linux PDAs.
RE: Weren't we joking about this rumor awhile back?
Yet another ignorant post about Memory Sticks. This is capitalism, companies produce standards in order to make money; Palm's 'universal' connector is proprietary technology, does that mean you'll stop using Palm PDAs?
At least Sony licenses its Memory Stick to other parties; this list is complete with the world's leading technology brands, both from West and East (note, none of them were forced to join the Memory Stick Forum):
http://makeashorterlink.com/?D1BB21C61
So what if you had to use Memory Sticks for everything? Quite frankly, the sooner that happens the better. Companies worldwide (listed above) can develop technologies based around the same standard, so we don't have to have incompatible devices, and since there is competition (noticed how there are different Memory Stick brands with varying prices?) consumers can only benefit.
For reasons too long to go into, I totally hate Sony. However, I will defend the right of companies like Sony to make money in free markets.
If you like, you should go back to your communistic Linux village where the right to profit from innovation is taboo and anyone who shows initative is an outcast. As history has shown us in a brutal fashion, innovation only arises through competition and thus the only thing the Linux model will do is take us a step backwards. Society cannot function through free distribution. Equally, technology will remain *relatively* static.
So wake up, the Linux model does not work - you know it doesn't when the movement gets eaten up by private companies and is backed by folks like AOL (the biggest financial rapist of consumers in history).
RE: Weren't we joking about this rumor awhile back?
I don't know what drug you are on, or whether you are another Micro$oftie, but where has most of the innovation in computing come from?
Internet:
Originally developed by US Defence, but then used by *Unix* geeks in universities, who bought it to the masses.
Email;
Commercial innovation? I think not. Invented by student.
WWW;
Populated by, and developed by; Linux/Hacking community. They made it what it is today.
Computers;
Charles Babbage, the inventor of the original computer never made a cent.
Alan Turing; Invented binary in his university thesis.
Innovation?
Compare a Windows server and a Linux based server in uptime, and then talk to me about innovation in the commercial sector.
While you have obviously been drugged by M$ FUD, linux has been innovating for years, and still remains to be free.
Microsoft? They sell a "new" office suite every two years for $200+ (Aussie$).
Has word processing changed dramatically in the last 5 years? NO.
Linux has succeeded where others have failed.
We, the Linux/Hacker community, are a threat to M$ where noone else is.
Please, look through history and see how most of the inventors who changed our world, never made a cent.
it seems obvious, that nerds in their free time, will make a vastly superior product, working with thousands of others, than a bunch of corporate programmers, stuck with marketing departments and deadlines.
=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=- 13yrs Old, Flat Broke
Odds of ever affording a palm without resorting to crime: 1765:1
I love Linux, but ...
Sure the installers are better and KDE/Gnome have much prettier icons than they used to, but installing/removing software, system maintenance, etc. is still way beyond the capabilities of most users.
If you want the future of UNIX for the masses, go look at OSX. It ain't perfect, but it is the first OS that is usable by virtually anyone but still has real UNIX (with all that entails) hiding underneath.
OK - everbody, back to the mud slinging.
Why does everyone hate MSFT?
RE: Weren't we joking about this rumor awhile back?
Jim
Memory Stick
Of course some may say SD/MMC is being upgraded to 256 MB and 512 MB so memory sticks will follow soon. This is possible but not very likely since Sony is introducing its new (smaller) memory stick duo, so they will probably stop developing the "classic" memory sticks. (I know you can use memory stick duo with an adapter on the current devices, but who wants to play around with an adapter?)
Now a lot of people will say "what the hell do you need so much memory for?". On a 128 MB-Memory Stick you can store approx. 25 MP3-Files which is pretty lame. Or you can store approx. an hour of video at 160x160. If you want to use Kinoma at maximum resolution landscape format you will need a 512 MB-storage for a complete movie of 2 hours.
Due to lacking storage the user cannot use Sony products to their full potential!
RE: Weren't we joking about this rumor awhile back?
I absolutely agree :) I have never owned a Mac, but i have seen the superiority in the OS.
Unfortunately, the average user doesn't even know there is an alternative OS.
I tell my friends how unreliable windows is, and they will laugh and say, go buy a Mac.
I explain Linux and they are interested, and even try it. The problem is that the nerds of today have been brought up in a MS world, and most of us teens were weened on DOS ;)
Because Linux has virtually no corporate entity, it cannot market its product.
Linux is made for nerds, by nerds. It is a great OS but it needs to be brought to the masses.
Bill Gates did a great job in bringing computers to the average Joe, but he made computing unreliable and frustrating as well. MOst people think that the constant crashing of Windows is an unavoidable problem.
While the masses are uneducated about LInux and its advantages, we will be stuck with the blue screen of death :)
What we really need is schools to use Linux
=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=- 13yrs Old, Flat Broke
Odds of ever affording a palm without resorting to crime: 1765:1
Portrait of a bad CEO
:(
RE: Portrait of a bad CEO
RE: Portrait of a bad CEO
Actually, Bruce Claflin is CEO. Eric Benhamou is chairman.
RE: Portrait of a bad CEO
This is not correct. Benhamou is both Chairman and CEO. I don't know who Bruce Claflin is but he isn't a top executive at Palm.
Palm's Top Managers:
www.palm.com/about/corporate/executive.html
Benhamou will continue to be CEO until PalmSource is spun off. Todd Bradley, who is currently the CEO of just the Solutions Group, will then assume the position, as the Solutions Group be be all that is left of Palm.
---
News Editor
RE: Portrait of a bad CEO
I think 3com doesn't own any Palm stocks.
They distributed all to 3com stock owners already.
I had to agree Palm hardware has not done any much
better.
PalmSource under David Negal seems to be doing
a much better job.
But until they sign up some more good licensees,
I still think PalmSource hasn't done a good job.
RE: Portrait of a bad CEO
> and CEO. I don't know who Bruce Claflin is but
> he isn't a top executive at Palm.
Well, he may not be a top executive at Palm, but your
article says:
> However, Benhamou is also CEO of 3Com, so it
> seems unlikely Palm would be sold without his
> blessing.
That is factually wrong -- Benhamou is Chairman of the
Board of 3COM:
http://www.3com.com/corpinfo/en_US/investor/resources/executivebios.html
Also, I do not think that 3COM still owns a majority
of the shares of Palm.
Oliver
RE: Portrait of a bad CEO
Thanks for the correction and I fixed the article. Sorry I didn't follow what you were saying the first time.
> I do not think that 3COM still owns a majority
of the shares of Palm.
It does according to the people I talked to and, frankly, I trust their expertise more than I do some anonymous person.
In any case, what is most important is Benhamou is showing no interest in selling Palm, which means such a deal is unlikely.
---
News Editor
RE: Portrait of a bad CEO
This information is public.
You talked to the wrong people I believe.
3com should have 0 share of Palm now.
I was a 3com stock holder and still is a Palm
stock holder.
People who has money can buy out Palm. It is not up to
Eric. But that will be a hostile takeover.
Most companies don't want to do that.
RE: Portrait of a bad CEO
RE: Portrait of a bad CEO
> to and, frankly, I trust their expertise
> more than I do some anonymous person.
Better get more reliable and knowledgable sources --
I think it's a bit embarrasing for a site called
"Palm Infocenter" to not know who OWNS Palm (or
rather, who doesn't).
Here's a 3COM Press Release snippet:
http://www.3com.com/corpinfo/en_US/pressbox/press_release.jsp?INFO_ID=7535
-------------------
Santa Clara, Calif., July 28, 2000-- 3Com Corporation (Nasdaq: COMS) announced today it has completed the separation of Palm, Inc. through the distribution of all of its 532 million shares of Palm, Inc. (Nasdaq:PALM). After the close of market yesterday, July 27, 3Com shareholders were issued 1.4832 shares of Palm, Inc. common stock for each share of 3Com common stock held. Cash will be issued in lieu of fractional shares. As a result of the distribution of shares of Palm, Inc. common stock, Palm is now a fully independent company.
-------------------
It really didn't take THAT much effort to find it...
> In any case, what is most important is Benhamou
> is showing no interest in selling Palm, which
> means such a deal is unlikely.
Then what's the whole point of this story that we're
commenting on? Slow "news" day??
BTW, I may not have signed *in*, but I did sign my
posting, so I wasn't actually an anonymous poster.
Oliver
RE: Portrait of a bad CEO
your work and the news provided by your site. But
a story titled "Palm Potentially Open for Buyout or
Merger" just makes little sense (isn't virtually
any company open for Buyout or Merger, maybe with the
exception of the Evil Empire?) and seems to be more
FUD (or space filler) than anything else. Just look
at the ever so meaningful comments it is triggering...
Oliver
RE: Portrait of a bad CEO
Rotten editorial
August is historically a slow PDA month, so I guess Ed really has to reach now.
RE: Portrait of a bad CEO
RE: Portrait of a bad CEO
Oliver, do us all a favor and silence yourself. Thanks.
RE: Portrait of a bad CEO
With respect to this article, there is a real confusion between reporting facts and presenting his opinions. I doubt Ed is seriously offended that people point out mistakes in what he has publically posted. What exactly are the rest of you jumping in to defend? His incorrect assertions? The fact that people find it reasonable to correct him? Kudos to accuracy and Oliver.
RE: Portrait of a bad CEO
The fact that it is much cheaper now to buy
Palm than a few days is definitely a big news.
But I do wish the fact is more accurate.
I do appreciate your work, Ed.
RE: Portrait of a bad CEO
> be purchased or merge with any company. That
> just changed this week. You are saying that's
> not news, Oliver?
No, it was predictable (or rather, known to happen)
for the past two years.
To me the only thing that was "news" in the story was the
Benhamou is CEO of 3COM and that 3COM owns a majority
of the Palm shares. Unfortunately -- or rather
fortunately -- both was also not true ;-)
> Oliver, do us all a favor and silence
> yourself. Thanks.
That's not worth further comment.
Oliver
RE: Portrait of a irritating reader
RE: Portrait of a bad CEO
> site. Please return to the higher plane
> of existence from which you descended.
Thanks for the suggestion. The more I read
here today, the more I agree with you. Obviously
there is a large number of readers who enjoy
spending their time "discussing" how to buy Palm with
their piggy bank or decry for the twentieth
time this week the evilness of Sony's memory
stick technology.
Oliver
RE: Portrait of a bad CEO
RE: Portrait of a bad CEO
Oliver: Please stick around, your dogged pursuit of reality and fact is refreshing... Just remember, throughout history, any call for critical thinking leads to persecution...
RE: Portrait of a bad CEO
Oliver, it's good that you are pointing out factual discrepencies. I applaud that. But stating your opinions as gospel is arrogant at best. The part I said silence yourself about is the opinionated whining, such as described above. Now the above paragraph was for all the whiners, however you make a great example as you have been the most vocal.
RE: Portrait of a bad CEO
--JM
Lemme check my piggy-bank
RE: Lemme check my piggy-bank
Thats a pretty tasty deal right there, even if they paid a nice premium of $2-3 a share, the price must be very tempting for some companies....
RE: Lemme check my piggy-bank
RE: Lemme check my piggy-bank
There is a good reason why Palm only worths
this much. Though it is very cheap considering
they have such a popular OS.
Do you know that 2 years ago they have more than 1B
dollars in the bank and a much more popular
OS then?
Would you pay 1B for Palm then? They have more than
1B cash at that time. :-(
ted
RE: Lemme check my piggy-bank
Who's got some money to spare?
- david
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Weren't we joking about this rumor awhile back?
It's scary when the jokes we make end up becoming a potential reality.
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