Palm’s Web OS mobile platform has a new fan: RBC analyst Mike Abramsky, who upgraded the stock today and hiked his price target to $12 from $5. So as the smartphone business becomes increasingly important, who’s going to want Web OS badly enough to buy it?
In a note today, Abramsky posits that Palm is “an attractive acquisition target,” possibly around $15-$16 per share (about twice the $8 it’s trading at today). Potential buyers he lists include handset makers looking for a new platform — BlackBerry maker RIM, Nokia, Samsung, LG, Sony Ericsson — and hardware/software companies looking for a new business — HP, Dell, Microsoft.
We agree that Palm could be a potentially attractive acquisition, assuming Web OS is as good as it looks.
But right now, we see companies that aren’t yet in the mobile industry as the most likely buyers — HP, Dell, or maybe a company like Cisco, which already does a lot of networking work but wants to increase its consumer exposure. We think Microsoft is less likely to buy Palm; we think it’s a better fit with RIM. Meanwhile, we think RIM and Nokia will try to make their existing smartphone platforms work before buying a new one.
Abramsky thinks Palm could sell 2.6 million Web OS devices in fiscal 2010, which ends in May 2010, and 4.1 million in fiscal 2011. That’s still small market share — 1% to 3% of the overall mobile business — but if Palm can get its margins in line, that should be a nice boost to the company’s business.
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