Hewlett-Packard has agreed to acquire Palm, a US mobile device maker whose financial performance during 2009 was one of the worst in the technology industry.
The IT giant will pay $1.2 billion for the acquisition, considerably more than the company’s market capitalisation of $781 million before the announcement. HP’s share price has fallen since the deal was announced.
Palm, whose personal digital assistants (PDAs) approached iconic status during the late 1990s but have since been eclipsed by such mobile devices as the BlackBerry, suffered a mean quarterly rate of revenue decline of 55.3% during the 2009 calendar year. This was the steepest decline among those companies that Information Age tracks as representative of the IT industry.
That year saw Palm undergo a transformation, as it launched a range of smartphone devices under the Pre brand and a mobile operating system named WebOS. But while the company managed to increase revenues 286% year-on-year to $349 million during its most recent quarter, it lost $18.5 million in doing so and that performance was considered by financial analysts to be a failure.
The acquisition continues HP’s march into the communications industry, the company having acquired network equipment manufacturer 3Com for $2.7 billion last year.
“The smartphone market is large, profitable and rapidly growing, and companies that can provide an integrated device and experience command a higher share,” said Todd Bradley, executive vice president of HP’s personal systems group, in a statement. “HP intends to be a leader in this market."