Palm Shares Soar On Buyout Report - InformationWeek

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Palm Shares Soar On Buyout Report

With Pre sales falling short of expectations, Palm may be looking for a buyer or strategic partner.

Palm shares jumped more than 20% in early trading Monday on a report that the struggling mobile device maker has placed itself on the auction block.

At one point, Palm's stock hit a price of $6.29 per share, an increase of 22% over the previous trading day's close of $5.16.

The surge was sparked by a Bloomberg report that indicated Palm is looking for buyers. Citing anonymous sources, Bloomberg said Palm has retained Goldman Sachs and Frank Quattrone's Qatalyst Partners to assist with the sale.

Android phone manufacturer HTC and personal computer maker Lenovo are among the potential buyers, Bloomberg reported.

Palm has been on a roller coaster in recent months.

The company renewed customer and investor hopes last year with the introduction of the Pre—a touch-screen device designed to steal some thunder from Apple's iPhone and RIM's Blackberry.

But those hopes were dashed after it became apparent that the Pre, which runs the company's webOS software, would not be Palm's savior.

In February, Palm dropped a bombshell earnings warning in which it told investors its fiscal third-quarter revenues would fall well short of analysts' expectations. Palm officials at the time also conceded that sales of Pre, as well as sales of its cousin Pixie, were falling short.

"Driving broad consumer adoption of Palm products is taking longer than we anticipated," Palm CEO Jon Rubinstein said at the time. Palm last month reported a net loss for the third quarter of $18.5 million, or 13 cents per share, on revenue of $49.9 million.

Palm has not officially responded to reports that it's on the block.

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