Hewlett-Packard to Buy Palm in $1.2 Billion Deal (HPQ, PALM)

By Dividend.com,  April 29, 2010, 08:16:41 AM EDT

PC maker Hewlett-Packard Company ( HPQ ) announced late Wednesday that it would buy struggling smartphone maker Palm Inc. ( PALM ) for around $1.2 billion.

H-P will pay $5.70 in cash for each share of Palm stock, which represents a 23% premium of its Wednesday closing price of $4.63.

The boards of both companies have approved the deal, which is expected to close by the end of July. H-P said it plans to "invest heavily" in Palm, in an attempt to make a dent in the smartphone market, which is currently dominated by Apple ( AAPL ) and Research in Motion ( RIMM ).

Hewlett-Packard shares fell 28 cents, or -0.5%, in premarket trading Thursday.

The Bottom Line
We had removed shares of HPQ from our "recommended" list back on Oct.1, when the stock was trading at $47.21. The company has a .60% dividend yield, based on last night's closing stock price of $53.28. The stock has technical support in the $47-$50 price area. If the shares can firm up, we see overhead resistance around the $56-$57 price levels. We would remain on the sidelines for now.

Hewlett-Packard Company ( HPQ ) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.4 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks , as well as a detailed explanation of our ratings system here .




The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.


This article appears in: Investing, Stocks

Referenced Stocks: AAPL, HPQ, PALM, RIMM



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