Pre Nup Agreements : Should Microsoft Buy Palm?

Palm could possibly be an acquisition target for a bigger company (may be Microsoft) based on the fact that its forthcoming Pre smartphone is seen by many as one of the most compelling rivals to Apple's iPhone.

On Friday, RBC analyst Mike Abramsky upgraded Palm's shares to outperform based not on current or past revenues but on what Abramsky says is the Pre's hardware and software propositions.

RBC became the third analyst after Deutsche Bank and Credit Suisse to suggest that Palm's outcome for 2009 is going to be outstanding. Abramsky's forecast for Palm is 2.6 million WebOS-based phones in 2009.

Palm saw the price of its stock fall to around $1 on the 5th of December 2008 before sharply rising after the company launched its Pre smartphone and the Web OS platform and the company's market capitalisation currently hovers around $930 million.

There are a number of reasons why Microsoft could potentially buy Palm. The software giant shares a good relation with Palm having forged a strategic alliance with the company back in September 2005 to launch Windows Mobile on the Treo Smartphone Family.

Buying Palm would not only give Microsoft access to a wealth of experience but also to its acclaimed Web OS platform, which many experts say, currently bests the iPhones in terms of features and responsiveness. Microsoft's window of opportunity is small though. It needs to act fast, before the end of the year and possibly before the iPhone 2009 comes out.

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Our Comments

This article could as easily be entitled Why Shouldn't Microsoft buy Palm? And there's one single reason. Windows Mobile 7. Microsoft has invested so much in it that it would be suicidal for the company to just dismiss it. WebOS, for all the good that it comes with, is essentially a Linux OS that has its own development environment (MOJO) and would take considerable retooling to make it a Windows-esque platform.

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