HP pins smartphone future on ailing Palm brand

HP pins smartphone future on ailing Palm brand

Joseph Galante and Rochelle Garner  |   April 30, 2010
Bloomberg BusinessWeek

Hewlett-Packard Co. Chief Executive Officer Mark Hurd may find his company’s latest foray into wireless phones is no easier than its failed first effort.

In a $1.2 billion deal, Hewlett-Packard yesterday said it would buy Palm Inc., maker of the Pre and Pixi phones. Hurd plans to tap Hewlett-Packard’s sales force, marketing muscle and knack for securing components at low prices to revive Palm.

Hewlett-Packard has made little headway in smartphones with its iPaq personal digital assistant. Palm may not do much to help its new owner win over customers loyal to Apple Inc.’s iPhone and the Research In Motion Ltd. BlackBerry.

“Just because H-P now has a smartphone in its lineup doesn’t mean people are going to wake up tomorrow and say, ‘Aha, this is the next Apple,’” David Garrity, principal at GVA Research LLC in New York, said on Bloomberg Television. “There are obviously a lot of things Apple has in terms of its iTunes store and apps that H-P doesn’t have.”

Palm’s shares rose $1.21, or 26 percent, to $5.84 at 4 p.m. New York time on the Nasdaq Stock Market, as some investors speculated another company may make a bid. Hewlett-Packard fell 40 cents to $52.88.

Hurd, who took over as CEO in 2005, is using acquisitions to broaden in businesses that generate higher profits than Hewlett-Packard’s personal computers and printers. Hurd, 53, this month completed the purchase of 3Com Corp. to step up competition with Cisco Systems Inc. in networking equipment.

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