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Sizzle Surrounding Palm
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Silicon Valley Bureau Chief
Here we go again, but this time there may be some steak to all that sizzle surrounding Palm.
Unstrung.com says takeover talk is heating up, that the Palm [PALM
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] executives may be trying to button up a deal some time before the company reports its earnings this coming Thursday. The site says Nokia [NOK
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] is now the front-runner and ready to pony up the estimated $2 billion purchase price, or $20 a share.
That's the report. But my sources continue to stick by what I reported on March 5 that Motorola is still in the lead position as CEO Ed Zander tries to come up with a bold way to energize his company. A deal with Motorola makes the most sense, at least according to James Faucette, the wireless analyst at Pacific Crest Securities.
"I think Motorola is the one that fits best, for the time being. Motorola [MOT
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] has already acquired primary palm partner Good Technology which makes a blackberry type solution. They've acquired Symbol, and adding Palm to that mix would definitely build out their capabilities in that area," Faucette tells me this morning.
The darkhorses in this Wireless Derby: Garmin, the handheld GPS device maker; and Microsoft [MSFT
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]. Sources have told me regularly that both these companies have been sniffing around for a possible deal with Palm.
But sources also tell me that Palm CEO Ed Colligan is holding out for a private equity deal of some kind, with Texas Pacific and Silver Lake Partners the most likely suitors.
There's also a major development today in the wireless world that may or may not be connected to the speculation about Palm. Our Bob Pisani first reported this morning that Zander has pulled out of his keynote speech at the big CTIA Wireless Conference in Orlando, Florida next week. The conference is one of the most important annual expos in the wireless business, with 40,000 attendees expected. Zander's presence there has been as predictable as Microsoft's Bill Gates at the huge Consumer Electronics Show.
His decision to pull out of his speech with just a week to go is raising a lot of eyebrows, with three possible scenarios swirling through Wall Street. (1) That a deal with Palm is imminent and he doesn't want to face a crowd or have to answer questions if the deal doesn't get done in time. (2) That Motorola may be taken private and giving in to the enormous pressure Carl Icahn is putting on the company's board to turn things around there as he Joneses for a seat on Motorola's board. (3) That Zander himself may be on the ropes and could be out of a job soon, with Motorola not wanting his face attached to the company at such a critical event.
Lets take a look at Door #2.
I spoke with Pablo Perez-Fernandez at G Square Asset Management who continues to be one of the most thoughtful voices on the wireless sector.
"Ed Zander has been under pressure because the RAZR has been the driving force at Motorola, and it's really been fading away and there's been no taker for the crown position in the Motorola handset business, so I wouldn't be surprised if Ed is under tremendous pressure to either deliver or get out. I wouldn't be surprised," says Perez-Fernandez. "CTIA in particular is a big deal for Motorola. The fact that he's pulled out may be telling you something that something is up. He's under tremendous pressure and he may not be there much longer."
That would be stunning and shows you just how quickly things can change in the technology business. Savior to outsider in just over three years? I've known Ed for years and have always trusted him as a straight-shooting, honest guy who wasn't afraid of rolling up his sleeves, getting dirty, playing rough, and doing what it took to get the job done. But this market moved very quickly and Motorola could not innovate its way to the next RAZR. The "Q" was seriously delayed. The cool little Bluetooth earbud never made it to market. Earnings lately have been abysmal with a very disappointing Fourth Quarter. There have been serious missteps. I'm not saying he's out. But the CTIA cancellation sends a powerful message that problems at Motorola may be more serious than people thought.
Meantime, back to Palm. Not sure where this goes from here. The company is clearly in play. And while a deal may be imminent with someone (Motorola? Nokia? Apple? Research in Motion? Garmin? Microsoft?), there is one thing I can guarantee: a truly fascinating conference call with analysts after the company releases earnings on Thursday.
Wow, the wireless sector can be fun!
Questions? Comments?
Data is a real-time snapshot *Data is delayed at least 15 minutes
