Is Nokia Going to Buy Palm?

Rumors and speculation are heating up that Palm, Inc. will be acquired by another company, with Nokia supposedly being one of the top contenders.

Citing unnamed sources, Unstrung is reporting that the bidding process of Palm has already begun, with Nokia up against at least one private equity firm.

The source predicts that the company will eventually be sold for about $20 per share. Palm stock is currently going for about $16.50 a share.

Why Sell the Company?

According to the Unstrung's source, Palm's management is opposed to the idea of selling the company, but some of its shareholders are in favor of it.

Supposedly, these shareholders believe that a small company like Palm can not continue to compete for the long term against much larger companies like Nokia and Motorola. They think that Palm's technology is going to become increasingly out of date without a large influx of cash from an outside source.

Exactly what a buyout could mean for Palm is not known. The management team could be replaced in full or in part, for example, or Palm could be completely absorbed into its buyer.

Naturally, a lot would depend on what company wins the bidding war that is supposedly going on. If Palm was acquired by a private equity firm, it might have high-level managers replaced, but would likely continue on virtually unchanged, aside from the having greater access to cash for research and development. If it was bought by another smartphone maker like Nokia, changes could be more profound.

Still Just a Rumor

It should be pointed out that Palm's management has confirmed nothing in this report.

In addition, this is far from the first time a rumor has indicated that Palm, Inc. is going to be bought by some other company. In fact, this happens about once or twice a year.

Still, the Unstrung report is unusually detailed for such a rumor.

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