Palm finally sinks, acquired by HP for $1.2 billion

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In an unexpected move today, HP announced it would buy ailing handset-maker Palm for $1.2 billion, a 23% premium. The decision has already been approved by the boards of both companies and will give HP a new strength in the mobile computing market -- an unquestionable bonus with tablet-fever on the rise. HP also has a little-known line of phones, which date back to the 2002 merger with Compaq.

"The smartphone market is large, profitable and rapidly growing," said HP vice president and former Palm executive Todd Bradley. He added that "Palm's innovative operating system provides an ideal platform to expand HP's mobility strategy and create a unique HP experience spanning multiple mobile connected devices."

This news comes just after rumors of a potential acquisition by Lenovo or HTC. Palm has been struggling to keep afloat for years, and due to a string of poor decisions (not least marketing), the company has quickly lost all renewed vigor from last year's introduction of its Pre smartphone and webOS platform.

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