$3B bid for PALM is Possible from DELL
June 12, 2009
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RELATED TICKERS: PALM.DL
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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?
http://blogs.barrons.com/techtraderdaily/2009/06/11/palm-new-models-takeover-target-short-squeeze/#mod=yahoobarrons 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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