Palm Reportedly For Sale, But Who's Going To Buy?

Bloomberg reported over the weekend that Palm is working with Goldman Sachs Group and Frank Quattrone's Qatalyst Partners on its potential sale. Bloomberg reporters Serena Saitto and Ari Levy cited sources close to the company as saying HTC and Lenovo have already looked at Palm, and that Palm began entertaining bids this week.

The past year has been a case of big potential and little result for Palm, which brought to market some of the best-reviewed smartphones of 2009 but found a lack of sales momentum for both its Palm Pre and Palm Pixi units. Hoping to spur broader sales of the devices -- and boost the exposure of WebOS, its proprietary mobile platform -- Palm released versions of both phones, dubbed the Palm Pre Plus and Palm Pixi Plus, to run on Verizon. In March, it also confirmed plans to have AT&T carry both phones.

Still, the market hasn't been kind. In Palm's most recent reported earnings, for the quarter ended in February, Palm reported an adjusted loss of $102.8 million, or a loss 61 cents per share, which was far worse than the 42-cent-per-share loss many analysts had predicted. Worse, Palm is projecting revenue for its next quarter, ending May 31, at less than $150 million, about half of what many analysts were eyeing.

A buyer for Palm would gain control of a critically praised mobile platform and a range of devices not without their charms. Still, Palm's WebOS and its smartphones go toe-to-toe with the titans of the space, including Apple and its iPhone platform and the galaxy of devices now running Google Android, not to mention Research In Motion's BlackBerry, phones running on Windows Mobile, and other OSes.

Palm CEO Jon Rubinstein has preached optimism throughout Palm's ordeal.

"We do have $590 million in the bank, and we have a plan that carries this company forward," Rubinstein said in a recent interview with Fortune. "Now, we need to be frugal and we need to invest in those areas that have the best return for us, but when I read that we're going out of business or our stock is worth zero or those kinds of things, it defies logic to me."

In its most recent rankings, researcher Gartner had Palm ranking sixth in North American smartphone market share, with 4.3 percent. RIM retains the top spot, according to Gartner, with 44 percent, followed by Apple with 24 percent.