HP-Palm Merger
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Case Code: BSTR383 Case Length: 27 Pages Period: 2009-2010 Pub Date: 2011 Teaching Note: Not Available |
Price: Rs.500 Organization: Hewlett-Packard, Palm, Inc. Industry: Information Technology, Electronics Countries: Global; US Themes: Strategic Options , Mergers and Acquisitions |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
Pre-Merger Challenges
HP
In November 2009, as part of its iPaq line of smartphones, HP launched the iPaq Glisten in the US through carrier AT&T. This device ran on Windows Mobile 6.5. Glisten, according to both HP and AT&T, was designed with the business user and 'prosumer' in mind...
Palm
In a public declaration in February 2010, Palm apprehended that revenues for FY 2010 would be much lower than the previously set target of between US$ 1.6 billion and US$ 1.8 billion. Following this announcement, in March 2010, Palm declared its financial results for the FY 2010 third quarter ending February 2010...
HP Buys Palm
In March 2010, rumors regarding Palm's acquisition by a larger corporation keen to enter or strengthen its position in the smartphone market started to gain momentum. Valued at US$ 870.8 million in April 2010, it was said that potential buyers would be attracted toward taking over Palm mainly because of its operating system - webOS...
Rationale for the Deal
Though HP had made quite a few acquisitions till that point, Palm was one of the first consumer brands that it took over and as such, the acquisition received a lot of attention from both the corporate world and news media.
Palm was on the verge of a collapse despite having technological acumen - performance indicated that it did not have the marketing acumen and/or the financial affluence to compete with the big names in the smartphone industry, viz., Apple, Google, RIM, etc. (Refer to Table II for Palm's position in the US smartphone platform market as of February 2010, as compared to November 2010)...
Market Reactions
The common reaction among experts regarding the HP-Palm merger was that it would prove to be a turning point for both Palm and HP. While for Palm, it was a corridor for survival - for HP it would serve as a means of entry into the consumer market for mobile devices...
Future of HP Palm
In July 2010, HP revealed immediate plans of launching smartphones based on webOS. The company categorically mentioned that its smartphones would not run on Microsoft Windows Phone 7 although it had plans of developing Slate PCs based on Windows 7...
Exhibits
Exhibit I: Fortune 500 Top Ten List for the Year 2010
Exhibit II: Income Statement of Hewlett Packard Company Limited
Exhibit III: HP's Business Divisions*
Exhibit IV: Palm's Product Time-Line
Exhibit V: Palm webOS
Exhibit VI: Income Statement of Palm Inc.
Exhibit VII: Worldwide Smartphone Market in 2010
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