Okay, so we know that Palm is up for sale. This information is now over 48 hours old. However Shaw Wu from Kaufman Brothers reckons that Palm will be sold in a fire sale for prices that are either similar to the $5 that we are seeing today or lower. In a note to investors he wrote:""We remain concerned that it may be a 'take-under,' meaning a price that is below its current share price," Kaufman Bros. (Citation: Kaufman Brothers Note). "
Now, I am not an analyst nor do I make any bones to be a stock market guru, but a little bit of research brought this little gem forward about a company named Huawei, thought to be an early suitor for Palm. Apparently Palm began talking to this company in "mid february" about a possible takeover, according to Thestreet.com and Reuters:
"Huawei was approached through its investment bank sometime in mid-February for "preliminary discussions,"a source told Reuters. The source said discussions hadn't since moved forward. "
(Citation: TheStreet.com Link ).
A quick review of Palm's stock price from February to March shows the following (Prices are at the weekly close):
Week of Weekly close
2/1 10.38
2/8 9.99
2/16 9.25
2/22 6.09
3/1 5.7
3/8 5.46
3/15 3.96
3/22 3.65
3/29 3.71
The question that arises if you are a shareholder in Palm and not on the board or on the inside is when exactly did that meeting take place? What caused the stock to drop so precipitously, going down 33% in one week? If the companies met somewhere before 2/16 (literal translation of mid february would mean around 2/14), then one could hope for a buyout at 8 or 10. If not, then the market drop today is predicting that it was during the week of 2/22 with the weekly close at 6, hence the price drop today to $5.16. Or could another company pay a premium for the company which floated above the $10 mark for a while?
Sad days, but if you are a shareholder, perhaps high risk and possibly high return days if Shaw Wu is wrong, especially if that meeting took place before 2/16.
LDD
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