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Hewlett-Packard to be Palm's new pilot; grabs struggling company for about $1.4B in cash
By RACHEL METZ
AP Technology Writer
(AP) (ET), Thursday, April 29, 2010 (SAN FRANCISCO)
Palm Inc. a pioneer in the smart phone business that couldn't quite make the comeback it needed, has agreed to be bought out by Hewlett-Packard Co. for about $1.4 billion in cash.

The two Silicon Valley companies announced Wednesday that the deal will see HP pay $5.70 for every Palm common share and certain preferred shares. Also included in the $1.4 billion price tag are payments for additional preferred shares, warrants and employee restricted stock units.

Counting Palm's cash and debt, HP's offer values the company at $1.2 billion.

Palm had closed trading Wednesday at $4.63 but traded as high as $18.09 in the past 52 weeks.

In after-hours trading, Palm shares jumped $1.20, or 25.9 percent, to $5.83 _ meaning some investors were willing to bet another suitor will step forward. HP shares dipped 38 cents to $52.90.

Palm was founded in 1992 by Donna Dubinsky and Jeff Hawkins and helped originate the handheld computing market with its Palm Pilot "personal digital assistants" in the 1990s. But after Palm reshuffled itself repeatedly _ it was bought by U.S. Robotics, a modem maker that itself was bought by 3Com Corp. in 1997, and then spun off again as its own company in 2000 _ other companies took control of the market.

In recent years, as handheld computers morphed into "smart phones," Palm struggled to keep up as consumers flocked to such devices as Apple Inc.'s iPhone and Research In Motion Ltd.'s BlackBerry. In the past year, phones that use Google Inc.'s Android operating software have added new competition.

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* Good for HP. *

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