The makings of the Palm-Handspring deal
More details on the Palm acquisition of the struggling Handspring, once valued at $9.2 billion but now acquired by Palm for less than $200 million. According to IDC, PDA sales will be flat this year, acbut PDA-phone combo sales are expected to triple to more than 13 million units this year from last year according to this Wall Street Journal story (subscription required):
Meanwhile, the deal will fill a growing hole in the product lineup at Palm, which has also been severely weakened by the tech slump. According to International Data Corp., Palm was the world's top hand-held computer maker last year, with a 36% market share. But it has little presence in the growing market for "smartphones," which combine hand-held organizers with cellphones, and it has few relationships with the telecom carriers that are the main sellers of such devices. Handspring, with a 7% market share, was No. 3 in the smartphone arena last year behind Nokia Corp. and Motorola Inc.
"We're building one of the strongest pure-play mobile-device companies in the world," said Mr. Bradley, CEO of Palm's hardware unit. He said that discussions with Handspring began late last year but didn't heat up until the past few months. The merged entity will have annual revenue of about $1 billion.
...Discussions between the companies were complicated, according to people familiar with the deal, because of a history of bad blood between Ms. Dubinsky and Eric Benhamou, Palm's chairman. Palm was acquired in 1995 by U.S. Robotics, which in turn was bought by 3Com Corp. -- then run by Mr. Benhamou -- in 1997. After Palm's success with the Palm Pilot, Ms. Dubinsky asked Mr. Benhamou to spin off Palm as an independent company, but Mr. Benhamou refused.