Rumour mill: Analysts split over 'Nokia to acquire Palm' speculation

The sudden 23 per cent rise in Palm's share price has been viewed by some industry analysts as an indication that the company has become an acquisition target, with Nokia being the mostly likely bidder. One US-based observer claimed that purchasing Palm would immediately boost Nokia's US footprint and provide it with a competitive smartphone platform to challenge Apple and Android.

"For Palm any deal with Nokia would bring plenty of scale, lots of distribution and a bigger balance sheet to grow its assets faster," said Matt Thornton, telecoms analyst at US firm Avian. However, he conceded that Nokia might flinch from the US$4 billion price tag to acquire Palm, together with the significant issues of integrating services and applications across the Ovi and WebOS platforms.

But this has not stopped the rumour from gaining further legs with other researchers putting forward Motorola, Dell, Cisco and HP as potential bidders for Palm.

However, others believe that the share price movements have been caused by Palm announcing it would sell about 16 million new shares, and investors seem keen to become involved. Also, according to Yahoo Finance, about 30 per cent of all Palm shares are sold short, meaning that the shares are easily manipulated by large market movers, and even small swings can start an avalanche in either direction.

There is also the fact that Nokia still seems committed to pushing forward with its own Maemo Linux and Symbian solutions, and adding Palm's WebOS to Nokia's portfolio would likely confuse consumers. While there is acceptance that Nokia needs to reshape itself, adding Palm to its already confused strategy is not the answer.

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