The two Silicon Valley companies, Palm Inc. and Hewlett-Packard Co. announced Wednesday that the deal will see HP pay $5.70 for every Palm common share and certain preferred shares. Palm had closed trading Wednesday at $4.63 but traded as high as $18.09 in the past 52 weeks.

In after-hours trading, Palm shares jumped $1.25, or 27 percent to $5.88 — meaning some investors were willing to bet another suitor will step forward. HP shares dipped 35 cents to $52.93.

Palm was founded in 1992 by Donna Dubinsky and Jeff Hawkins and helped originate the handheld computing market with its Palm Pilot "personal digital assistants" in the 1990s. But after Palm reshuffled itself repeatedly — it was bought by U.S. Robotics, a modem maker that itself was bought by 3Com Corp. in 1997, and then spun off again as its own company in 2000 — other companies took control of the market.

In recent years, as handheld computers morphed into "smart phones," Palm struggled to keep up as consumers flocked to such devices as Apple Inc.'s iPhone and Research In Motion Ltd.'s BlackBerry. In the past year, phones that use Google Inc.'s Android operating software have added new competition.

Palm got itself into position for a turnaround last June, when it released a sleek touch-screen smart phone called the Pre and fresh operating software for it that won good reviews. But consumers were slow to embrace the Pre and its newer, smaller sibling, the Pixi. In the most recent quarter, Palm sold just 408,000 phones. In its last quarter Apple sold 8.75 million iPhones.



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