Palm sees overseas growth, doesn't mention buyout
(Adds details, byline, CEO comment, updates stock activity)
NEW YORK, April 10 (Reuters) - Palm Inc. (PALM.O) said on Tuesday Treo phone sales in Europe and Asia would spur growth in the next three to five years, but declined to discuss the topic of most interest to investors -- rumors it is for sale.
At a meeting with analysts in New York, Palm executives cited research that forecast the market for smartphones -- which surf the Web, send e-mail and manage data in addition to making phone calls -- growing to $36 billion by 2009.
"We think there is a big wave coming in this whole mobile computing revolution, which is becoming a bigger part of the overall mobile phone business. We have an enormous opportunity ...," Chief Executive Ed Colligan said. "You can expect us to do business development around the world."
Palm, whose Treo phone competes with Research In Motion Ltd.'s (RIM.TO) Blackberry, said it would deliver new products, and suggested it was developing operating system software based on the open-source Linux platform.
But executives declined analysts' repeated requests for specifics, saying only that information would come soon.
Colligan also refused to comment on market chatter about the potential for Palm to be acquired, which analysts say has helped boost its stock by about 20 percent so far this year. Earlier in March, sources told Reuters Palm had hired Morgan Stanley to pursue a buyer.
In a preamble to the meeting's question-and-answer period, Palm Chief Financial Officer Andrew Brown requested that participants refrain from asking about the rumors.
Asked about Palm's refusal to discuss the much-speculated topic, Colligan told Reuters: "We asked people at the very beginning -- it's not something we are prepared to talk about."
He repeated that the company has not commented on reports Morgan Stanley is helping it explore a sale.
"I have never confirmed that," he said on the sidelines of the meeting. "We have been working with Morgan Stanley for more than 10 years on various efforts that are ongoing constantly. I wouldn't misinterpret that too much."
Mobile phone makers Motorola Inc. (MOT.N) and Nokia (NOK1V.HE), and computer makers Dell Inc. (DELL.O) and Hewlett-Packard Co. (HPQ.N) have all been subject to speculation that they are interested in Palm. Reports have also said that bids could come from private equity firms.
The market chatter quieted somewhat after a bid failed to appear in late March. Palm's shares have since slipped about 13 percent and fell 1.57 percent to close at $16.91 on Tuesday.
Both Research in Motion and Palm, which sold more than 2 million Treo units in calendar 2006, have come under pressure to produce cheaper and more consumer-friendly devices to expand beyond business clients, as bigger mobile phone makers, such as Nokia and Motorola, push into this market.
Apple Inc.'s (AAPL.O) iPhone, due in a few months and expected to be a big seller, is also seen as a rival to the Treo.
Brodie Keast, Palm's senior vice president of marketing, said the iPhone would not be as compelling to the business customer who buys Treos, and suggested the iPhone would be "primarily an entertainment device" and "a wide-screen iPod."
Palm said it has a 3-year to 5-year goal of delivering gross margins of 33 percent to 36 percent and operating margin of greater than 10 percent. That compares with a gross margin range of 29 percent to 37 percent over the 2004-2007 fiscal years and an operating margin of 1.5 percent to 8.6 percent.
((Reporting by Franklin Paul; editing by Andre Grenon; Reuters Messaging: Franklin.Paul.reuters.com@reuters.net; Franklin.Paul.reuters.com +1 646 223 6195)) Keywords: PALM OVERSEAS/
(C) Reuters 2007. All rights reserved. Republication or redistribution ofReuters content, including by caching, framing or similar means, is expresslyprohibited without the prior written consent of Reuters. Reuters and the Reuterssphere logo are registered trademarks and trademarks of the Reuters group ofcompanies around the world.nN10428883
