From Deseret News archives:
PalmSource shares surge after news of Japanese buyout
The news had some analysts wondering how PalmSource, which has failed to excite investors since Palm Inc. spun it off two years ago, could draw such an offer.
"This was really dumb," said Needham & Co. stock analyst Charles Wolf. "They are paying that kind of money for a company with no real profits and one product. I'm stunned."
Access was offering $18.50 for each share of PalmSource common stock, an 83 percent premium to the stock's Thursday closing price of $10.09 on the Nasdaq Stock Market. PalmSource's share price rose $7.89 to close at $17.98 on Friday.
PalmSource has seen its market share erode since its separation from Palm Inc., a darling of the tech investors in the high-flying 1990s. Microsoft Corp. and Symbian have in recent months gained in handheld operating systems.
Nevertheless, more than 45 companies worldwide have licensed PalmSource software. More than 39 million mobile devices run on the Palm OS.
Access produces the NetFront Internet browser for mobile devices. By acquiring PalmSource, it is positioning itself to offer phone makers more applications as well as the Palm OS, said Forrester Research analyst Charles Golvin.
The problem is that while the Palm OS ran a slew of traditional handhelds, that business is "drying up" Golvin said. The trend in handhelds, says Golvin, is moving towards smartphones.
"I think the questions about PalmSource revolve around growth and future devices," Golvin said. "How much penetration can the Palm OS grab in the future?"
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