Is Motorola Pressing Palm?

CEO Zander cancels a conference date, fueling merger talk.
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Motorola

(MOT)

chief Ed Zander's sudden schedule change fuels speculation that the company is preparing a deal with

Palm

(PALM)

.

Zander was scheduled to give a keynote speech at the CTIA Wireless industry conference next week in Orlando, Fla., but he had an "unforeseen scheduling conflict" and had to cancel,

Bloomberg

reported Tuesday.

Zander's surprising absence from the high-profile event helps add to the ongoing rumors that Palm is taking offers from heavyweights in the mobile phone business and private equity.

"There's a process being run," said one hedge fund manager, referring to bankers shopping Palm around to private-equity groups. The investor has been a longtime holder of Palm stock and clearly would be a beneficiary if the company gets a good takeout price.

The iconic PDA maker has struggled recently as new smartphones have threatened the company's Treo phone. Adding to the pressure is the upcoming release of

Apple's

(AAPL) - Get Report

iPhone, which could steal a big chunk of the high-end phone market.

Observers say Palm's attractiveness lies with its business services expertise. Outfits like

Nokia

(NOK) - Get Report

or Motorola could use Palm as a entry to corporate sales and a weapon against

Research in Motion's

(RIMM)

BlackBerry email devices.

But other industry watchers aren't as willing to bet that Zander's absence signals a Palm deal.

Compounding the matter, big investor Carl Icahn has been adding to his Motorola holdings in hopes of influencing the board to use the company's cash for stock buybacks.

Having no blockbuster phone to replace Razr as the sales stoker, Motorola has turned in three consecutive disappointing quarters, and analysts say a fourth disappointment is in the works.

A Palm deal is a long shot bet for Motorola, says one buy-side analyst. But I think a "justified reason of such a withdrawal from CTIA, is that a preannouncement was forthcoming."

Palm rose 75 cents to $18.89, while Motorola was up 53 cents to $18.82.