Report: Lenovo eyes Palm acquisition

Posted by Trent Nouveau

Lenovo is reportedly considering a possible acquisition of Palm after HTC (unsurprisingly ) declined to make an opening bid for the moribund company.

"A most suitable candidate will be a mainland Chinese [corporation]," Lu Chialin, an analyst at Macquarie Securities in Taipei, told Reuters.

Report: Lenovo eyes Palm acquisition

"They've got a lot more free cash and don't have the brand presence in the United States, so that will all give them that boost they need."

According to Reuters, a successful deal could potentially reach a lucrative $1.3 billion, due to Palm’s $1 billion market capitalization and 30 percent premium paid in recent tech deals.

However, Vincent Chen, an analyst at Yuanta Securities, cautioned that an acquisition of Palm by Lenovo simply wouldn’t be a "good idea" at the current time.

"If it does [acquire], it's got to be prepared to take on some of Palm's losses and may have to see at least a few more quarters of losses from them,” explained Chen.

Another anonymous investment banking source expressed similar sentiments.

"What are you buying - a good operating system?" he asked rhetorically. "It's a wounded brand."