It appears Palm is on the block, and will seek a buyer rather than let cash burn run the stock all the way down to zero. Reports today suggested that Palm has hired Goldman Sachs and Frank Quattrone to sell itself as early as this week. The stock gained 17% today to close a little over $6 per share, which is 50% higher than the levels it has scraped along at recently.
A buyout at current levels will mean that employees had better hope for a new job at the acquirer, rather than any stock option windfall. The company's recent 10k shows that the average exercise price is higher than where the shares currently trade.
(And yes you're reading this right, there are PALM options with an exercise price of over $400...)
Sadly for Palm employees, the companies that are said to be among the potential interested parties (Lenovo, HTC) will cut costs to the bone, and are more likely interested in Palm's technology than they are in running the business.
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