Is HTC Interested In Palm?

Palm’s stock is gaining ground based on reports that Taiwanese handset maker HTC has “opened discussions about an intent to acquire” the company.
In the past four months, Palm’s stock has plummeted, falling from $12 to $3 a share based on poor sales at Verizon Wireless. The low valuation has led to several rumors that companies, such as Lenovo or Dell, might be interested in the company to gain ground in mobile. But today, the rumor that HTC was interested appeared in Taiwan’s Economic Daily News, according to Reuters, which led to the stock soaring 11 percent in late afternoon trading to about $5.15 a share. An HTC spokesperson said the company does not comment on rumors.
The speculation comes just a day after an interview with Palm’s CEO Jon Rubinstein appeared in Fortune’s Brainstorm Tech blog. In the frank conversation, Rubinstein admits the company has hit a speed bump, and that the set-backs are really disappointing and frustrating.
As with all of Palm’s likely buyers, none of them make total sense. For instance, HTC is primarily a hardware maker and does not own its own operating system, but rather relies on Microsoft’s Windows Mobile and Google’s Android. Some analysts speculated awhile back that HTC could be interested in Palm (NSDQ: PALM) for its intellectual property rights, which could come in handy as HTC battles Apple (NSDQ: AAPL) in an infringement lawsuit.
But Rubinstein remains confident despite loads of excessive inventory and dwindling cash resources. “The company has tremendous assets, he said. “We’ve got a great team we’ve built over the last couple of years. Remember this whole thing was a transformation story…We started off with a company that had no future, and we have been transforming it….We do have $590 million in the bank, and we have a plan that carries this company forward. 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.”
However, Rubinstein was quick to deflect questions about selling the company. Fortune’s Adam Lashinsky, suggested one way to get more cash would be to sell Palm to a company that has a billion dollars to spend on marketing. Without even coming close to the question, Rubinstein answered: “Remember that the carriers have something to do with all this too in that they get to pick and choose what products they’re going to sell. They want to make sure the customers have choice. As long as we have their support, I think we can succeed. It may take longer than we’d like, but I think we can get there.”