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IBDvalueinvestin (98.34)

$3B bid for PALM is Possible from DELL



June 12, 2009 – Comments (3) | RELATED TICKERS: PALM.DL2 , DELL.DL , BB

Dell: Collins Stewart discusses potential Palm aquisition (13.27 ) : Dell has articulated in both words and action (capital raise) that due to deflationary headwinds and maturity of served mkts, they will be hard pressed to grow revenues organically. Dell's initial efforts in smart phones have been met with a resounding yawn by the carriers. The converged device arena is shaping up to be a land grab and Dell has a window to capture mind-share via Palm (PALM). Firm says this acquisition will be born of mutual necessity and represent a strategic fit for both parties. Dell can afford to expend about a third of its gross cash or $3 bln for an all cash transaction. Palm falls well under this threshold.


June 11, 2009, 1:03 pm Palm: New Models? Takeover Target? Short Squeeze? Posted by Eric Savitz

Palm (PALM) shares are sharply higher today, recovering from a sell-off earlier in the week, on a strong reception for the company’s announcment last night that Jon Rubinstein will succeed Ed Colligan as CEO. Rubinstein, who drove the development of the Pre and the WebOS operating system software, well liked by the Street, and the appointment is being viewed as a reward for his early success with the Pre.

But there are other factors at work here as well. The Rubinstein appointment has triggered a flurry of commentary from the Street, almost all of it positive. In perhaps the most noteworthy piece, Bank of America/Merrill Lynch analyst Vivek Arya reiterated his Buy rating on the stock, while raising his price target to $16, from $14. The higher target, he says is based on positive impressions of the Pre, the imminent launch of an ad campaign for the device, and strong interest in Palm from multiple carriers. He also writes enthusiastically about Rubenstein, noting that he “was instrumental in launch of the Pre,” and will likely “take Palm to the next level in products and partnerships.”

In his review of the product, Arya says his impressions of the Pre were “very positive.” Arya writes that “the keyboard was easier to use than we thought, and battery life was sufficient for a day’s use.” The software, he writes, “was impressive.”

Some other key points:

Arya estimates first weekend sales of about 80,000 phones, “which could have been twice as large if it were not for limited supplies and lack of advertising.”Arya says Sprint and Palm together will spent $100 million on an ad campaign.He notes that the company may need to raise cash later this year.Deutsche Bank analyst Jonathan Goldberg predicts the company can return to cash-flow break-even by the November quarter.Goldberg predicts the company will offer a Blackberry-style fixed QWERTY keyboard form factor with AT&T this year, with another device launching at Verizon either late in 2009 or early in 2010. He expects a European launch in the same time frame.Palm will report May quarter results on June 25. While the results won’t be very good, the focus will be on the success so far of the Pre, and any hints about future handsets.Citigroup analyst Jim Suva comments that while WebOs is “fantastic,” he finds the battery life of the device to be “poor.” He also thinks the lack of removable memory is a mistake.Suva says the Pre is a “solid offering,” but that the real value is in the operating system software; he thinks WebOs makes the company a potential takeover target.Suva also notes that short interest in the stock is high, at about 30% of the float, and that the top 10 holders control 70% of the shares. The combination, he says, could lead to a short squeeze.

PALM today is up $1.01, or 8.4%, to $13.

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3 Comments – Post Your Own

#1) On June 12, 2009 at 10:33 AM, cbwang888 (25.40) wrote:

Combining 2 losers isn't a good idea

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#2) On June 12, 2009 at 12:19 PM, IBDvalueinvestin (98.34) wrote:

I doubt that you seriously have looked at the PRE with that general statement because the PRE is like nothing PALM has ever dreamed of before. 

Its being called a "Game Changer"


Palm Pre: 100,000 Sold So Far

by John Paczkowski
Posted on June 12, 2009 at 8:30 AM PT

Palm (PALM) has shipped 100,000 Pres since the device debuted on June 6. This, according to J.P. Morgan analyst Paul Coster who estimates that more than 50,000 phones were sold in the first two days it was available and says the company may have sold another 50,000 in the days that followed. “Channel checks conducted Thursday, the 11th, suggest shipments to Sprint stores have averaged about 10- 15 units every 2 days, implying about 36K-55K units will have shipped by Saturday (1,200 stores, three shipments of 10-15 units),” Coster said in a research note issued this morning.RadioShack inventory has been replenished once (back to launch-date levels or higher), whereas Best Buy has not received additional units (based on very limited sample). Our channel checks included 28 Sprint stores across the nation, 3 Radio Shack stores, and 3 Best Buys. … Though we came away with a generally favorable impression of the sell-in momentum that Palm is currently experiencing, we also detected a lot of uncertainty. Sprint stores are being dripfed devices without much certainty or uniformity regarding timing and quantity. A Best Buy associate expressed hope that devices would be delivered by Friday but sounded doubtful.”

Coster’s suggestion for folks intent on buying a Pre but frustrated by meager supplies at Sprint Stores and Best Buy: try Radio Shack, which “seems to have been neglected by eager early adopters.”


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#3) On June 12, 2009 at 2:11 PM, IBDvalueinvestin (98.34) wrote:

The buyout BID for PALM I posted this morning finally makes it to the Headlines:



Deal Talk Moves Dell, Palm, Sprint, Qwest

06/12/09 - 01:03 PM EDT

Tech chatter turned this week to possible deals, with analysts and investors trying to pick logical targets.

The top deal candidates this week are Dell (DELL Quote) and Palm (PALM Quote). Palm delivered its Pre phone last weekend and, more important, the company's WebOS software, which looks to be a viable contender in the still-unfolding smartphone operating system market.

Stuck in a rut with slumping PC sales, Dell has talked about exploring deals for months, but this week CEO Michael Dell indicated he expects to make an "significant-sized" acquisition, according to reports. To Wall Street observers, Palm's smartphone rebirth and its tenuous financial structure suggest a ripe takeout candidate. Palm shares jumped 12% Thursday on Dell deal chatter.

On Friday, analysts at Collins Stewart issued a note to clients saying Dell needs a foothold in smartphones and Palm needs size to compete with Nokia(NOK Quote), Apple(AAPL Quote) and Research In Motion(RIMM Quote). The note also estimates that Dell has the $3 billion in cash it would need to pull off the deal.

It's worth noting that there has been long-running speculation that No. 1 PC shop Hewlett-Packard(HPQ Quote), with its ample cash, would also find Palm a good fit. But there has been nothing to report on that front.



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