World's leading PC maker Hewlett-Packard is all set to enter the ever-competitive smartphone market by acquiring Palm Inc. for $1.2 billion. A definitive agreement has been signed between the two companies, under which HP will purchase the struggling smartphone maker which has failed to gain much traction against Apple iPhone and RIM's BlackBerry.
With the help of this acquisition, HP aims to combine its global reach and financial strength with Palm's feature-rich webOS mobile operating system in order to participate more agressively in the highly profitable smartphone market. “Palm’s innovative operating system provides an ideal platform to expand HP’s mobility strategy and create a unique HP experience spanning multiple mobile connected devices,” said Todd Bradley, executive vice president, personal systems group, HP.
"The smartphone market is large, profitable and rapidly growing, and companies that can provide an integrated device and experience command a higher share. Advances in mobility are offering significant opportunities, and HP intends to be a leader in this market,” added Todd.
On the other hand, Palm's current chairman and chief executive officer Jon Rubinstei, who is expected to remain with the company, added, “We’re thrilled by HP’s vote of confidence in Palm’s technological leadership, which delivered Palm webOS and iconic products such as the Palm Pre. HP’s longstanding culture of innovation, scale and global operating resources make it the perfect partner to rapidly accelerate the growth of webOS. We look forward to working with HP to continue to deliver industry-leading mobile experiences to our customers and business partners.”
Under the terms of the agreement, Palm stockholders will receive $5.70 in cash for each share of Palm common stock that they hold at the closing of the merger. The transaction is expected to close during HP’s third fiscal quarter ending 31 July 2010.
Palm had reported a loss of $22 million for the three months ended 28 February 2010, terming it "very dissapointing."