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More tech mergers, please
M&A activity is picking up, and that's a good sign.
June 6, 2003: 10:41 AM EDT
By Adam Lashinsky, CNN/Money Contributing Columnist

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PALO ALTO, Calif. (CNN/Money) - It takes a really strong person to not say "I told you so." I'm clearly not that strong.

When word crossed the tape Wednesday morning that Palm and Handspring will merge, I thought of my column in Fortune two years ago that screamed, "Handhelds: Hold Hands!," urging a union of the two Silicon Valley companies.

Palm (PALM: Research, Estimates) and Handspring (HAND: Research, Estimates) share history. Tech visionary Jeff Hawkins and his entrepreneurial partner, Donna Dubinsky, founded Palm. When they felt mistreated there, they started Handspring.

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The companies, however, have lost billions of dollars in market capitalization in the past two years. And remember, two years ago their stocks already were down more than 90 percent each.

So clearly this is a situation of better late than never.

Friday news: Oracle bids $5.1 billion for PeopleSoft

But it is better than the alternative. The merger of Palm and Handspring is like the end of a family squabble. Hawkins will be Palm's chief technology officer. And it provides a noble victory for Dubinsky, who'll stay on the merged company's board.

The real winner

The real victory here, however, is for the tech industry. This is a modest deal -- it's worth less than $200 million. High-priced investment bankers once wouldn't have answered the telephone for such small change.

But it's a clear signal that the badly needed consolidation of the tech industry isn't just underway. It's in full gear.

Whatever else you think of HP's Carly Fiorina, she is triumphantly taking a victory lap for predicting that consolidation was inevitable and necessary.

The HP-Compaq merger, announced just before Sept. 11, 2001, started this process. The announced merger earlier in the week between PeopleSoft and J.D. Edwards was another piece of the equation.

Now the joining of Palm and Handspring -- where top-level egos stood in the way of this happening until it became imperative -- shows the tech industry is serious about business.

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It's a given that too many companies got formed during the tech bubble. Handspring arguably was one of them. In a less forgiving climate, Dubinsky and Hawkins wouldn't have left Palm in the first place.

But they did, in part because it was so easy to raise money. Now they're back. And the market is happy, with shares of both companies registering double-digit gains on Wednesday.

These are the things the market needs so investors are confident again: Concluded trials of Wall Street big shots is one. Companies reporting quarters that were better than a year ago is another. And mergers that make sense is a third.


Adam Lashinsky is a senior writer for Fortune magazine. Send e-mail to Adam at lashinskysbottomline@yahoo.com.

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.