Rumors over a possible buyout of Palm by computer manufacturer Lenovo caused the mobile phone company's stock to rise by 20 percent today.
Hedge fund investors are speculating that Lenovo will soon place a bid to acquire Palm, though option strategist Frederic Ruffy of WhatsTrading.com calls it "unsubstantiated speculation" that's only based on Palm's performance over the past several months. Palm's stock, marred by a loss of around 60 percent just this year, jumped as high as $4.65 a share today and eventually closed at $4.62—up 77 cents and 20% from yesterday.
Lenovo CEO Yang Yuanqing did not comment on the speculated buyout of Palm, but did state that they were looking to "build out its mobile Internet business" through planned future acquisitions. Shaw Wu of Kaufman Brothers, an investment banking firm, stated that Lenovo might not even have the funds to acquire Palm and predicted HP as a more plausible suitor.
Palm’s value has suffered some major losses through this year as slow sales of its Pre and Pixi devices has worried investors of its future. The stock has plummeted to pre-CES 2009 levels, right before the company introduced its new webOS mobile operating system and the Palm Pre.