culo77
Member
Registered: May 2001
Location: Chicago
Posts: 236 |
this what i read at WSJ
By PUI-WING TAM
Staff Reporter of THE WALL STREET JOURNAL
"It seems a natural: getting Palm and Handspring to sync.
So say some money managers and analysts in the wake of the recent resignation of Palm's chief executive, Carl Yankowski. They are hoping his departure might pave the way for the big maker of hand-held devices to merge, or sync, using the jargon of the hand-held devices they both make.
The history of the two companies, which both rely on the Palm operating system, is intertwined. Palm Inc. was founded in 1992 by Donna Dubinsky and Jeff Hawkins, who left the Santa Clara, Calif., company in 1998 to launch and run Handspring Inc. While both companies enjoyed explosive growth last year, the two have run into the crippling technology-sector slowdown and a sea of red ink this year as they have slugged it out in a price war. Their stocks, which track each other closely, have plunged more than 90% so far this year. Both Palm and Handspring have been restructuring and groping for ways to boost sales.
Several months ago, amid the difficult economic climate, rumors began percolating of a possible union of the two Silicon Valley companies. People familiar with the situation say there aren't any talks about a potential deal, but there is a clamor for such communication to take place, especially now that Mr. Yankowski's departure from Palm leaves the top job there vacant.
"Carl's leaving might be a catalyst to get [the combination] going," says Ian Link, portfolio manager of Franklin Technology Fund, which until earlier this month owned a stake in Palm. Mr. Link says he casually floated the merger idea with Palm executives several months ago. "If the companies are seeking to survive, they would do better together," he says.
Robert Cihra, an analyst who recently left ABN Amro, adds: "One of the best things these guys could do is get the band back together," so they can quit dueling with each other and focus their attention on their much-bigger rival, Microsoft. Mr. Cihra says "there's more talk" of a Palm and Handspring deal lately since "it makes sense to a lot of people." He has also informally brought up the prospect with officials at both companies in the past few months, he says.
A spokeswoman at Palm declines to comment, while a spokesman at Handspring, Mountain View, Calif., says there are no talks with Palm, adding "there is no [combination] happening." Both companies have unveiled turnaround plans -- Palm has hired new managers and Handspring has slashed costs, with both working on new products -- in recent months to get their businesses back on track, stay independent and boost their share prices.
The pair enjoyed whiz-bang initial public offerings in 2000, running up to highs of more than $90. In 4 p.m. Nasdaq Stock Market trading Friday, Palm rose 53 cents, or 18%, to $3.43, while Handspring gained 69 cents, or 21%, to $4.
Any potential deal faces one huge hurdle: personalities. Past conflicts haunt Handspring's top executives as well as Eric Benhamou, the chairman and interim CEO of Palm who is a former chief executive of 3Com. The tangled history dates to the mid-1990s, when Palm was sold to 3Com. There, Ms. Dubinsky and Mr. Hawkins disagreed with then-CEO Mr. Benhamou about whether to spin off Palm into a separate company. Mr. Benhamou demurred on a spinoff, so Ms. Dubinsky and Mr. Hawkins left to create Handspring. Some time after the duo's exit, Mr. Benhamou decided to spin off Palm.
To be sure, not all investment managers are rooting for a combination. Curt Rohrman, manager of USAA Science and Technology Fund, which invests in both Palm and Handspring, says the two companies should remain independent. That way, Handspring can set its own course by differentiating itself with new products such as the coming Treo, a hybrid mobile phone and hand-held computer, he says. In addition, Palm can continue to license its operating system to other hardware makers without swallowing its largest licensee, Handspring. "I doubt [a merger] is going to happen," Mr. Rohrman says.
But a merger can't be dismissed. People familiar with the situation say a Handspring acquisition was discussed at Palm last year in a "war room" scenario. The idea later was dropped.
A combination especially makes management sense now, money managers say. Palm is in the midst of splitting its hardware and software businesses into separate units. The company has hired David Nagel, AT&T's former chief technology officer, to run its software group. As a result, any new Palm CEO would primarily be in charge of hardware -- an area in which Ms. Dubinsky and Mr. Hawkins already have proved themselves as innovators, fund managers say.
"Palm needs leadership right now and the quick source to get it from is Handspring," says Jeff Van Harte, a portfolio manager at Transamerica Investment Management, who sold his Palm stock earlier this year. He says he may purchase Palm shares again if the company exhibits "clear leadership," among other things.
A union also would make economic sense, analysts say. Rather than differentiating their products in a hardware field that includes Casio Computer, Compaq Computer, Hewlett-Packard and Sony, the two have engaged in price wars, leaving each other battered. In a recent report, Charles Wolf, an analyst at Needham & Co., says a merger of the two companies could lead to "significant savings in marketing a single brand and in eliminating duplicative research and development expenditures."
What's more, a merger would allow the two companies to join forces to take on Microsoft, analysts say. Microsoft has been vigorously pushing its Pocket PC hand-held platform with a new software upgrade and a multimillion-dollar ad campaign. Indeed, Microsoft's success has helped to reduce Palm's operating-system market share to about 80%, down from 89% last year.
A merger also would be inexpensive at this juncture, says Needham's Mr. Wolf. In the most likely scenario, he says, the larger company, Palm, with its $2 billion market capitalization, would be the acquirer. Handspring's market capitalization stands at about $500 million. Mr. Wolf sees Handspring as a relatively cheap target, and notes that it has no debt on its books"
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Hey baby before we start do you mind if we use my M505?
No not for that!!!!!!!!!!
Use it to reffer to PalmaSutra, silly???????
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11-19-2001 05:23 PM
Good thing
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