Report: Palm searching for a smartphone suitor

Palm is in the early stages of looking for a potential buyer, according to a Bloomberg report--news that touches off a fresh round of speculation about the future of the struggling smartphone company.

The report, citing three unnamed sources familiar with the matter, said Palm is working with Goldman Sachs and another investment bank, Qatalyst Partners, to find a buyer. According the report, both HTC and Lenovo have expressed interest in the company, and might make a bid.

Representatives from Palm and HTC declined to comment. Palm, which has struggled with sales of its webOS devices, has in the past been the target of takeover speculation, and Nokia and Dell have often been mentioned as potential buyers.

The new report comes shortly after Palm CEO Jon Rubinstein expressed confidence that the company could turn around. In an interview with Fortune last week, the Palm chief said that the company has "a plan that allows us to execute moving forward."

"I still believe that there's going to be likely five successful players in this space," he said. "It's a huge and rapidly growing market.  And I think that having a small share of that market you can have a successful company. We just need to get up to scale, and that's our number one goal."

UBS analyst Maynard Um said in a research note that although there is value in webOS, "We believe an acquisition at its current enterprise value (approximately $1.1 billion excluding a premium) is unlikely given the lack of widespread webOS acceptance to date and potential dilution to the acquirer."

"Although we have not validated Bloomberg's claim, we note that the article could raise concern from Palm's customers given the potential uncertainty of the company's future," Um wrote. "With a number of other handset vendors to choose from, we believe there is risk that its large customers may choose certainty (support, warranties, customer service, roadmaps, etc.) from other vendors to reduce risk. We believe this could be modestly positive for vendors including Motorola and RIM."

For more:
- see Bloomberg article
- see this ZDNet article

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