HTC Bows Out Of Palm Buy-Out

After taking a look at Palm's books, HTC doesn't like what it sees. The company is no longer interested in purchasing Palm. Who is left to buy the ailing smartphone maker? Lenovo is still interested, though Palm CEO Jon Rubinstein still believes the company can go it alone.HTC's due diligence on Palm scared it off. In examining what Palm has to offer, an HTC source said, "There just weren't enough synergies to take the deal forward." That's probably putting it politely.

With HTC out of the picture, does it make sense for any other company to buy Palm? Many think it should be Lenovo. "A most suitable candidate will be a mainland Chinese company," said Lu Chialin, an analyst at Macquarie Securities in Taipei. "They've got a lot more free cash and don't have the brand presence in the United States, so that will all give them that boost they need."

Lenovo recently unveiled an Android device called LePhone. Lenovo makes PCs, but is interested in the smartphone space. It's unclear if LePhone would gain any traction here. If Lenovo were to buy Palm -- and keep the Palm brand alive -- it could open the door for a successful entry into the U.S. market.

Though suitors are lining up and giving Palm a thorough look-see, that hasn't stopped Palm CEO Jon Rubinstein from publicly insisting the company can survive. Speaking to the Financial Times, he said, "I believe Palm can survive as an independent company. We have a plan that gets us to profitability." Rubinstein didn't elaborate on what that plan is.

What does Palm need to do to make it on its own? Sell more handsets. Lots more handsets. Rubinstein still thinks that is a distinct possibility. He indicated that the company is working "fast and furious on new handsets" and said, "We do have a strong pipeline of products in the future."

But how far out into the future? Palm needs to sell handsets starting immediately. Its Pre and Pixi handsets have faltered at Verizon Wireless, which Palm had hoped would put it back on its feet. Palm has a solid operating system in webOS, but it needs much better hardware wrapped around that platform.

Can Palm do it?