Tag Archives: Business

HP to Acquire Palm for $1.2 Billion

HP (NYSE: HPQ) and Palm, Inc. (NASDAQ: PALM) today announced that they have entered into a definitive agreement under which HP will purchase Palm, a provider of smartphones powered by the Palm webOS mobile operating system, at a price of $5.70 per share of Palm common stock in cash or an enterprise value of approximately $1.2 billion. The transaction has been approved by the HP and Palm boards of directors.

“We look forward to working with HP to continue to deliver industry-leading mobile experiences to our customers and business partners.”

The combination of HP’s global scale and financial strength with Palm’s unparalleled webOS platform will enhance HP’s ability to participate more aggressively in the fast-growing, highly profitable smartphone and connected mobile device markets. Palm’s unique webOS will allow HP to take advantage of features such as true multitasking and always up-to-date information sharing across applications.

“Palm’s innovative operating system provides an ideal platform to expand HP’s mobility strategy and create a unique HP experience spanning multiple mobile connected devices,” said Todd Bradley, executive vice president, Personal Systems Group, HP. “And, Palm possesses significant IP assets and has a highly skilled team. The smartphone market is large, profitable and rapidly growing, and companies that can provide an integrated device and experience command a higher share. Advances in mobility are offering significant opportunities, and HP intends to be a leader in this market.”

“We’re thrilled by HP’s vote of confidence in Palm’s technological leadership, which delivered Palm webOS and iconic products such as the Palm Pre. HP’s longstanding culture of innovation, scale and global operating resources make it the perfect partner to rapidly accelerate the growth of webOS,” said Jon Rubinstein, chairman and chief executive officer, Palm. “We look forward to working with HP to continue to deliver industry-leading mobile experiences to our customers and business partners.”

Under the terms of the merger agreement, Palm stockholders will receive $5.70 in cash for each share of Palm common stock that they hold at the closing of the merger. The merger consideration takes into account the updated guidance and other financial information being released by Palm this afternoon. The acquisition is subject to customary closing conditions, including the receipt of domestic and foreign regulatory approvals and the approval of Palm’s stockholders. The transaction is expected to close during HP’s third fiscal quarter ending July 31, 2010.

Palm’s current chairman and CEO, Jon Rubinstein, is expected to remain with the company.

Via Businesswire

Google’s Acquisition Binge: Why It Bought Picnik

Google CEO Eric Schmidt backs his words with his wallet. In September, Schmidt announced that Google would buy one small company per month. In a bit less than seven months since, Google has bought — um — seven small companies. Google’s latest acquisitions are all about doing things faster online and on your phone. In addition to buying Aardvark, a service that helps people get quick answers from their network of contacts online, Google last month bought reMail, which simplifies searching e-mail messages on a phone.

This week, Picnik became the latest high-flying start-up to join the Google team. The popular photo-editing site has 17 million unique monthly visitors and traffic growth of 10% a month. Picnik simplifies the process of cropping, editing and adding special effects to photos stored on your computer or on sites such as Flickr, Picasa or Facebook. Apple’s much anticipated iPad release later this month will overshadow Google’s recent stealthy acquisitions. But as social networking, cloud computing and phone applications loom ever larger, Google’s purchases may add up to equally significant impact.

Here are six reasons why Google is betting on Picnik.

1. Filling a Critical Gap Google fills software gaps as much through acquisitions as it does with engineering. After buying plain-Jane photo-management service Picasa in 2004, Google bought Neven Vision in 2006 to spice Picasa up with facial recognition. But after Yahoo! snatched up Flickr in 2005, Picasa never caught on as broadly as its competitors. Even as digital photography has exploded, Picasa has continued to lack sophisticated editing capabilities, making Picnik a crucial acquisition.

2. Cloud Power Over the past few years, Google has been snapping up leading Web-based software start-ups that make it easy to edit documents, spreadsheets and presentations online. Now Schmidt and Co. have added the best available photo-editing tool. Strategically speaking, you might think of it as a carefully orchestrated effort to gradually sideline Microsoft’s lumbering desktop software suite. To that end, Picnik will bolster Google’s launch of its new Web-oriented Chrome operating system later this year. “The consumer market is evolving into a model where every useful or interesting application starts with a login to the cloud,” says Nat Burgess, president of the Corum Group, an M&A advisory firm, and a member of Picnik’s advisory board. (See pictures of China mourning the potential loss of Google.)

3. Apps As more consumers use their phones for snapping and sharing photos, Google’s new, no-stress editing tool could soon give it a key competitive advantage in phone photography. In an interview with TIME a month before the acquisition, Picnik CEO Jonathan Sposato said developing a great, easy-to-use phone app was an important project for Picnik. By launching a feature-rich, easy-to-use app version of Picnik, Google can speed ahead in the race for phone-software supremacy.

4. Defense Google couldn’t afford to repeat the mistake it made in letting Flickr go to Yahoo! in 2005. When asked about potential acquirers before selling Picnik to Google, Sposato said potential matches ranged from tech giants Apple, Yahoo! and Microsoft to photo companies such as Snapfish, Shutterfly and Kodak. Google had to act decisively to avoid a Flickr-like missed opportunity.

5. Data With a billion uploads in its database, Picnik has a mountain of information about how people edit their photos. Because Picnik now enables people to edit photos they have stored through Yahoo! Mail, Flickr, Facebook and other services, Picnik also has info on photo usage all across the Web. Google craves data of that sort, particularly as it prepares to launch its cloud-based Chrome operating system.

6. Talent Google puts deals in one of two baskets — small talent buys and big strategic buys. In Picnik they got two for the price of one. Among Picnik’s 22-person staff are three former Microsoft employees — “three of the best guys ever to step off the Redmond campus on one team,” boasts Picnik adviser Burgess — along with other respected Web talents. Marcelo Calbucci, an entrepreneur who founded Seattle 2.0, a service for Seattle start-ups, estimates on his blog that Google paid at least $46 million for Picnik, possibly twice that much. Picnik and Google have both refused to disclose purchase terms.

“It is the best example that I have seen to date of the extraordinary power of Google’s culture,” says Burgess. “There were many reasons why this acquisition could have stalled — the political issue of paying a premium to buy the company of an employee who left Google, the fact that Google already has a photo-editing suite and Picnik’s reliance on the Flash platform. Google as a company was able to navigate past these hurdles and close the deal. Other bidders were stalled by their own political inertia.”

Via Stumbleupon

Twitter Plans Search Ads Like Google’s

Twitter’s got a new plan to make money from its ultrapopular micropublishing system — copy Google’s lucrative search ads — according to All Things D.

The idea is that Twitter will let advertisers sign up to have their ads show up as tiny 140-word posts when users search through Twitter or through other search engines that use its API.

As Peter Kafka describes it:

A search for, say, “laptop,” may generate an ad for Dell. The ads will only show up in search results, which means users who don’t search for something won’t see them in their regular Twitterstreams…. The services will have the option of displaying the ads, and Twitter will share revenue with those that do.

That’s a fine way to start, because it won’t really interfere with the current reading and publishing of the system, and allows the company time to tune its algorithms. Google’s tech juggernaut runs on text ads, and still makes some 60 percent of its more than $20 billion annual revenue from these kinds of contextual ads placed next to search results — the first ad product it ever introduced.

Google makes about a third of its money from its AdSense program, which lets publishers sign up and have little text ads run on their websites.

That kind of program is the logical next step for Twitter, allowing users to sign up to have, say, every 10th post be an ad placed through Twitter. That ad is related to something the user is talking about (an ad for a nearby restaurant if a user is talking about a neighborhood), or simply a branded ad placed because the advertiser likes a particular Twitterer’s audience.

While that might be more lucrative for Twitter, it would certainly be a larger change and could alienate users. So that makes starting with search ads — something nearly all net users are comfortable with and expect — a smart place for Twitter to start, even if there isn’t all that much searching going on.

Pundits and tech journalists have been wondering for years when and how Twitter would make money. Add this plan to the current recurring millions it gets from licensing its real-time streams to Microsoft and Google, and Twitter has a pretty good answer.

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