Reading the Palm buy-out – outlook doesn’t look good

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Remember when we told you Palm was readying their bank accounts for a buy-out today? Well, doesn’t look like it’ll be happening, at least not today.

Reuters is reporting that sure, the talks are still happening (with who is still unknown, people are being tight-lipped), but with Palm slowly falling to the bottom of the barrel in the smartphone market, there’s some uneasiness starting in the stomach of possible purchasers.

Several sources familiar with the matter told Reuters on Wednesday that while Palm continues to attract takeover interest, any deal announcement on Thursday would be very surprising.

The likelihood that Motorola would buy Palm also diminished after the cell phone maker cut its outlook on Wednesday, analysts said.

Palm in February said that it is willing to put up with lower prices and narrower gross margins as it works to boost its share of the so-called smartphone market. Palm’s Treo competes with Research In Motion Ltd.’s Blackberry e-mail device in the market for phones with mini keyboards and computer-like features.

To be honest, I was really pulling for Motorola in this deal (and who knows, it could still happen). The design aesthetics of the Treo have always been pretty swell, and Motorola seems to churn out some pretty devices, too – imagine what an amalgamation of the two would look like?

But if they don’t touch the technology, then we’ll be talking about another buy-out in no time – that’s the obvious matter. That OS needs some crucial changes, but I think with the right know-how and ingenuity, there’d be a pretty hot competitor in the smartphone market.