Palm Looking at Huawei as Possible Buyer

Sunnyvale-based handset vendor Palm has had a series of rather weak quarters lately, which culminated with reports regarding its 'on sale' status. While recent news on the matter pointed towards HTC Corporation and Lenovo for a possible takeover of Palm, it seems that the smartphone maker approached another telecoms company for the move, namely Huawei.

A recent article on Reuters unveils the fact that, “Palm contacted Huawei's investment bank in mid-February” in an attempt to kick off preliminary talks regarding the buyout. A source familiar with the move states that the discussions are in the same state as they were in February. The news site also notes that the process hasn't been made public as of now.

“As a matter of policy, Huawei does not comment on speculation about possible mergers or acquisitions. Huawei is always open to consider opportunities that will further enhance its business development,” the company said in a statement, Reuters notes. One thing that is certain is that speculations on a possible takeover helped Palm's shares grow more than 55 percent over the past week.

Palm has seen increasing competition from Apple's iPhone, RIM's BlackBerry and from handsets powered by Google's Android operating system, which resulted in poor sales and lower than expected revenues. This is not the first time rumors on a possible takeover emerge, but things seem to be well in this direction at the moment, and a near such announcement from Palm would not come as a surprise.

However, it still remains to be seen how high the bids for Palm will go. The company is estimated to be worth around $1.3 billion, though analysts suggest the purchase price might be lower. “We remain concerned that it may be a 'take-under,' meaning a price that is below its current share price,” Kaufman Bros analyst Shaw Wu said, Reuters reports. The handset vendor registered increased operating losses, and expenses might remain high due to the increased competition, Shaw Wu added.