Palm looks to Europe, Asia for growth

Palm Sees Overseas Growth

NEW YORK (Reuters)—Palm Inc. said on Tuesday it sees growth fueled by stronger sales of its Treo mobile phone devices in Europe and Asia, and it made no mention of recent speculation about it possibly being a takeover target.

At an analyst day in New York, Palm executives cited research that forecast the market for smartphones—which surf the Web, send e-mail and manage data in addition to making phone calls—growing to $36 billion by 2009.

Palm Chief Executive Ed Colligan said the market for smartphones is poised for mass market expansion, and Palm is spending in anticipation of that growth.

“We think there is a big wave coming in this whole mobile computing revolution, which is becoming a bigger part of the overall mobile phone business. We have an enormous opportunity going forward,” he said at the meeting. “You can expect us to do business development around the world.”

Colligan in his prepared remarks did not detail how much the company would spend on its key growth initiatives such as global expansion, increasing carrier partnerships, and improving the strength of its brand with consumers.

He also made no mention of market chatter about the potential for Palm to be acquired, which analysts say has helped boost its stock by about 20 percent so far this year. Earlier in March, sources told Reuters that Palm had hired Morgan Stanley to pursue a buyer.

Mobile phone makers Motorola Inc. and Nokia, and computer makers Dell Inc. and Hewlett-Packard Co. have all been speculated to be companies possibly interested in Palm. Reports have also said that bids could come from private equity players.

Palm, whose Treo phone competes with Research In Motion Ltd.’s Blackberry e-mail device, has repeatedly said it would not comment on acquisition rumors and is sticking to its business plan.

The chatter has quieted somewhat in recent weeks, after a bid failed to appear in late March. Palm’s shares have since slipped about 13 percent.

Both Palm and Research in Motion have come under pressure to produce cheaper and more consumer-friendly devices to expand beyond business clients, as bigger mobile phone makers such as Nokia and Motorola push into this market.

Apple Inc.’s iPhone, due in a few months and expected to be a big seller, is also seen as a rival to the Treo.

Brodie Keast, Palm’s senior vice president of marketing, said the iPhone would not be as compelling to the business customer who buys Treos, and suggested the iPhone would be “primarily an entertainment device” and “a wide-screen iPod.”


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