Palm shares jump on acquisition rumors - again

Palm shares are on the rise as yet another wave of speculation about an acquisition starts floating around Wall Street.
Written by Sam Diaz, Inactive

Shares of Palm are seeing a big spike today - the second time this week, for that matter - on rumors and speculation that the struggling smartphone maker will be acquired.

Shares jumped about 20 percent on Wednesday on rumors that Lenovo was interested in Palm. Following a report out of Taiwan today that device maker HTC might be in talks with Palm, the shares have jumped again, up about 12 percent so far in today's trading.

An investor's note from Barclays Capital yesterday acknowledged the Lenovo rumor. It mentioned that the costs of the acquisition and integration could be a deterrent for a company like Lenovo. But it also recognized that Lenovo has been "increasingly active in the mobile space" and that it would "not rule out inorganic means to expand its mobile biz." The analysts said they remain cautious about the likelihood of such a deal but could not dismiss the possibility.

Wall Street has not been overly optimistic about Palm's future, though it is seeing some progress through wireless carrier channels, where prices are dropping fast to entice consumers to check out Palm's offerings. Still, the competitive landscape is strong.

Apple this week announced new features coming to the iPhone OS later this year, Microsoft is expected to announce some feature phones next week and remains on rack to release Windows Mobile 7 later this year and RIM has suggested that there are big things to keep an eye out for in the second half of the year.

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