Hewlett-Packard purchases Palm for $1billion

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The Palm Pre was launched last year to enthusiastic reviews and had industry insiders dubbing it the ‘iPhone killer’. The Palm was unable to live up to expectations and was crushed by Apple and Blackberry sales.

Despite Palm’s inability to break into the smart phone market, Hewlett-Packard announced Wednesday that it planned on purchasing the company in a $1bn deal. According to the BBC, HP’s reasoning behind the acquisition is a strategic move to increase HP’s market share of hand-held devices:

“Palm’s webOS operating system would help it expand more aggressively in the fast-growing market for smart phones and connected mobile devices. When Palm’s debt is included, the deal values the company at $1.2bn.”

The deal is set to be completed by the end of July with HP paying $5.70 for each Palm share. While this is above the current price Palm’s shares are trading at, it is significantly less than the 52 week high of $18.09. The problem facing Hewlett-Packard in the future will be turning Palm’s third quarter $22 million loss into a future net profit for their company.

Dell was also rumored to be interested in buying the company.