Palm to buy Psion?

Palm is trying to buy UK PDA pioneer Psion in order to take control of Symbian, according to claims doing the rounds among London's stock brokers, at any rate.

Earlier today, Psion's share price rose to 290 on the rumour, but later fell to 213 after it admitted its wireless device development deal with Motorola was over.

Psion is Symbian's majority shareholder. Symbian was formed to take Psion's Epoc 32 operating system and build a platform for next-generation mobile communications and computing. Since then, it has attracted the support of the likes of Nokia, Matsushita, Sony, Ericsson and Motorola, all of who have invested in the company.

Palm won't discuss the matter. Psion's official line on the claim is a 'no comment', but one insider, cited by the APX newswire, was sceptical. He said any move by Palm to take over Symbian via a Psion acquisition would be rejected by Psion's fellow Symbian stakeholders.

We're not so sure about that. After all, Sony, Nokia and Motorola have close ties with Palm, either as a PalmOS licensee, software partner or hardware supplier, so they might be very happy to get Palm in on the deal. The end of Psion's joint development programme with Motorola, a Palm pal, suggests Motorola may even have given its blessing to a Palm acquisition.

We're dealing with Palm and we're dealing with Symbian, so why not bring the two together and simplify matters, you can just see the likes of Nokia and Motorola thinking.

Bear in mind, though, that misheard whispers of the end of the Motorola-Psion team-up could equally be the source of the Palm takeover rumours.

Symbian would certainly be the target of any Psion takeover were Palm to make such a move. Palm could well do with a new, more advanced OS to provide a more powerful framework for its increasingly Internet-oriented applications and to take advantage of faster, more capable processors.

Symbian's Epoc 32 is an ideal contender, and indeed Nokia and Palm are already modifying the Palm UI to run on top of an Epoc core. Like we say, there are some very close ties between Palm and various Symbian members.

Palm has a market cap of around $15 billion, so it has plenty of resources to make a pass at Psion's shareholders.

"Palm would have to buy in paper; trouble is, its paper is based on the company being valued as a software company," said the Psion source. "If Palm were to licence Symbian it would say to the market that it is not a software company, because it doesn't have a next-generation operating system which is competitive."

Except, of course, that by buying Psion, Palm would get a next-generation OS for itself, so that's possibly less of an issue than APX's (senior, we suspect) Psion deep throat believes.

Psion said that the loss of Motorola's development money would cost it around £12 million in 2001 profits. ®