by Brenon Daly
We have to hand it to Palm Inc – the smartphone maker got out while the getting was (relatively) good. At least that’s one way to think about Palm’s decision to sell to Hewlett-Packard in April 2010 for $1.2bn. Hitting that bid looks even smarter in light of the beating that Research In Motion has taken since then, including Friday’s capitulation by many longtime shareholders. Consider this: since Palm became an HP business, RIM on its own has lost 80% of its market value. (Meanwhile, the Nasdaq is up slightly during that period.)
While some of RIM’s staggering decline can be traced back to the company’s own missteps around product delays, its fortunes also stand as a sort of proxy for the ‘non-hot’ (i.e., not Apple iOS- or Google Android-based) mobile market. And in that way, we shudder to think how Palm would have fared there if it remained a stand-alone smartphone vendor.
After all, Palm was barely holding on with a single-digit market share, not to mention the fact that it was teetering financially at the time of its sale. The unprofitable company was burning cash and, in the quarter the deal was going through, had just forecast that sales would fall off a cliff. In contrast, RIM is still profitable and growing. But you wouldn’t know that from the relative valuations of the firms. In its sale, Palm was able to fetch a not insignificantly higher valuation than RIM currently garners on the market.