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Buy H-P In Wake Of Palm Acquisition, Says Adami

After the bell on Wednesday the Fast Money traders were rethinking their smartphone strategies after H-P inked a deal to acquire Palm.

The deal is valued around $1.2 billion or $5.70 a share – that’s more than a 20% premium over Palm's closing price.

H-P said Palm's webOS operating system will help it participate more aggressively in the fast-growing market for smart phones and connected mobile devices, explains CNBC's Jim Goldman.

I think the deal is all about webOS, he speculates. As H-P develops new netbooks and other gadgets it’s likely they will all run on webOS – what is now HP’s own software. I'd expect that to be a great business proposition for HP and a terrible development for Microsoft and Google , Goldman adds.

What's the smartphone trade now?

Strategy Session with the Fast Money traders

It’s interesting to me that Palm stock traded up to $5.90 in the after market, says Karen Finerman. That's above the deal price. Maybe there’s another suitor, she muses, but I wouldn’t make that bet. And for anyone interested Goldman and Catalyst were the bankers for Palm, she adds.

$1.2 billion for Hewlett Packard is like buying a Snickers bar for you and me, says Guy Adami. I’d be a buyer of H-P on the weakness. And RIM sold off in the aftermarket on the news. I’d be a buyer of that stock too.

The merger makes me more bullish on the space overall and as a result I’d keep an eye on Qualcomm, says Tim Seymour. I’m a buyer.

HP needed to get into mobile, says analyst Pete Misek of Canaccord Adams, and this was a cheap way to do it. Imagine what it would have cost if they had to acquire Nokia. And I think Palm must be breathing a huge sign of relief. (You might remember Misek was among the analysts who had a $0 price target on the stock.)

As a second derivative trade, I’d look at NVDA, counsels Patty Edwards. They provide 3D software which I think could be incorporated into H-P's new gadgets. And I’d look at Best Buy and RadioShack , which will be selling the new gadgets.

What do you think? We want to know!

As you might remember, on Friday March 19th, Fast Money spoke at length about Palm’s prospects with Whitney Tilson of T2. At the time he told the desk I’d say the odds are 60% that somebody buys the carcass for a song and 30% that they file for bankruptcy, he adds. And there’s a 10% chance of a Hail Mary pass and they survive.

Now he tells us, we really thought given the trends in the business the company would be acquired when it was trading down near $1 a share.




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Trader disclosure: On Apr 28, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Kelly Owns (FXE) Puts; Kelly Owns (AUY) Calls; Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Finerman's Firm Is Short (IWM), (MDY), (IJR); Finerman's Firm Is Long S&P Puts; Finerman Owns (AAPL); Finerman's Firm Owns (BAC), (BAC) Leap; Finerman Owns (BAC), (BAC) Preferred; Finerman Owns (GOOG); Finerman's Firm And Finerman Own (JPM); Finerman's Firm Owns (MHK); Finerman's Firm And Finerman Own (WFC) Preferred; Finerman's Firm Owns (GLW); Seymour Owns (AAPL), (BAC), (POT); Scaramucci Owns (PFE), Skybridge Owns (PFE)

For Tim Seymour:
Seygem Asset Management Owns (POT)

For Dennis Gartman
Funds Managed By Dennis Gartman Own Gold
Funds Managed By Dennis Gartman Own (FXI)
Funds Managed By Dennis Gartman Are Short Sterling
Funds Managed By Dennis Gartman Are Short Yen
Funds Managed By Dennis Gartman Are Short Euro

For Brian Kelly
Kanundrum Capital Is Long U.S. Dollar
Kanundrum Capital Owns (TLT)
Kanundrum Capital Owns (NTES)
Kanundrum Capital Owns (AWI)
Kanundrum Capital Is Short (FDX)
Kanundrum Capital Is Short (CLF)
Kanundrum Capital Is Short (BCS)
Kanundrum Capital Is Short (DB)
Kanundrum Capital Is Short (MCO)
Kanundrum Capital Is Short (STT)
Kanundrum Capital Is Short (IVZ)
Kanundrum Capital Is Short (USO)
Kanundrum Capital Is Short (RSX)
Kanundrum Capital Is Short (EWH)
Kanundrum Capital Is Short (EWY)
Kanundrum Capital Is Short (FXI)

For Patty Edwards
Edwards Owns (DOW) For Clients
Edwards Owns (C) For Clients
Edwards Owns (BAC) For Clients
Edwards Owns (MS) For Clients
Edwards Owns (JPM) For Clients
Edwards Owns (WFC) For Clients
Edwards Owns (V) For Clients
Edwards Owns (GOOG) For Clients
Edwards Owns (YHOO) For Clients
Edwards Owns (MSFT) For Clients
Edwards Owns (INTC) For Clients
Edwards Owns (SPY) For Clients
Edwards Owns (QQQQ) For Clients
Edwards Owns (GLD) For Clients
Edwards Owns (PGM) For Clients
Edwards Owns (HD) For Clients
Edwards Owns (PCL) For Clients
Edwards Owns (AAPL) For Clients
Edwards Owns (MCD) For Clients

For Jared Levy
Peak6 Investments Owns And Has An Options Position In (DOW)
Peak6 Investments Owns And Has An Options Position In (CMCSA)
Peak6 Investments Owns And Has An Options Position In (GLW)
Peak6 Investments Owns And Has An Options Position In (S)
Peak6 Investments Owns And Has An Options Position In (TLT)
Peak6 Investments Owns And Has An Options Position In (C)
Peak6 Investments Owns And Has An Options Position In (BAC)
Peak6 Investments Owns And Has An Options Position In (GS)
Peak6 Investments Owns And Has An Options Position In (JPM)
Peak6 Investments Owns And Has An Options Position In (WFC)
Peak6 Investments Owns And Has An Options Position In (V)
Peak6 Investments Owns And Has An Options Position In (COF)
Peak6 Investments Owns And Has An Options Position In (YHOO)
Peak6 Investments Owns And Has An Options Position In (MSFT)
Peak6 Investments Owns And Has An Options Position In (LOW)
Peak6 Investments Owns And Has An Options Position In (WY)
Peak6 Investments Owns And Has An Options Position In (AAPL)
Peak6 Investments Is Short And Has An Options Position In (CMCSK)

Peak6 Investments Is Short And Has An Options Position In (XLF)
Peak6 Investments Is Short And Has An Options Position In (MS)
Peak6 Investments Is Short And Has An Options Position In (MA)
Peak6 Investments Is Short And Has An Options Position In (BIDU)
Peak6 Investments Is Short And Has An Options Position In (GOOG)
Peak6 investments Is Short And Has An Options Position In (NTES)
Peak6 Investments Is Short And Has An Options Position In (HD)
Peak6 Investments Is Short And Has An Options Position In (PCL)
Peak6 Investments Is Short And Has An Options Position In (AWI)
Peak6 Investments Is Short And Has An Options Positoin In (CTXS)
Jared Levy had put in an order to buy (GS) as of Halftime Report but did not yet own shares.

For Whitney Tilson
Funds Managed By Whitney Tilson Are Short (PALM)



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