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Handspring up 35% on Palm talk
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November 19, 2001: 4:23 p.m. ET
Departure of Palm CEO sparks merger speculation, Handspring denies rumors
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NEW YORK (CNN/Money) - Shares of Handspring Inc. soared 35 percent Monday amid rumors that it is in merger discussions with rival Palm Inc.
Santa Clara, Calif.-based Palm (PALM: up $0.44 to $3.87, Research, Estimates), whose shares gained nearly 13 percent Monday, declined to comment on the reports.
Mountain View, Calif.-based Handspring (HAND: up $1.41 to $5.41, Research, Estimates) denied the rumors.
"We are not in discussions with [Palm] about any kind of merger," a spokesman told CNN/Money.
Handspring has not even been approached by Palm, the spokesman said. A Palm-Handspring combination has long been rumored and the departure of Palm CEO Carl Yankowski, who resigned earlier this month, has renewed speculation, he said.
Now that Yankowski is gone, the maker of the popular hand-held devices, may be more open to merger discussions with rival Handspring, the interactive version of The Wall Street Journal reported Monday.
Rumors also circulated last week that Microsoft Corp. was interested in buying either Palm or Handspring, analysts said.
A Palm-Handspring merger would help Handspring the most, said influential analyst Andy Neff of Bear Stearns. "A combination with Palm would be a great deal for Handspring because Handspring has a weak product lineup," he wrote in a research note.
Handspring, which is unprofitable, is primarily a device company using Palm's operating software, Neff said.
Palm is restructuring and will begin operating as two separate business groups, one that focuses on hardware and another on the Palm operating system software.
"There is complete overlap between the product lines (although Palm has a low-end line while Handspring does not) so there is no clear advantage [for Palm] of adding the product lines together," Neff said. 
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