Motorola Looks Like Palm's Main Squeeze
If the frenzied speculation around a Palm (PALM) buyout is to be believed, the deal is in the final stretch, and the company will make an announcement by the end of the week.
But there are signs that Motorola will emerge as the winner in the bidding process.
A buyout of Palm could happen at more than $20 a share. "Someone paying $1.5 billion to $2 billion is paying just one times revenue, so my guess is a deal will be at around $22 to $25 a share," says Phil Butts, a portfolio manager with Moreton Bay Capital, which has owned shares of Palm in the past but currently does not have a position in the stock.Palm spokeswoman Marlene Somsak declined to comment on the buyout chatter. Shares of Palm have soared more than 16% since the beginning of the month, when buzz about a possible sale intensified. The stock was up 60 cents, or 3.2%, to $19.37 late Wednesday.
A Little Back StoryA buyout, when it happens, will be a surprising end to a company that has fought hard for the right to stay independent and chart its own destiny. Palm started as Palm Computing in 1992 with Jeff Hawkins and Donna Dubinsky, who still sits on the company's board of directors. In 1997, the company became a subsidiary of 3Com (COMS). Unhappy with the company's direction under 3Com, Palm's founders and current CEO Ed Colligan left to form Handspring, which made PDAs using the Palm OS.
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