TECH STOCKS: Palm Gains Lead Tech Rally Following H-P Deal

By Rex Crum

Palm Inc. posted big gains Thursday, leading the tech sector higher after Hewlett-Packard Co. said it would acquire the struggling maker of smartphones such as the Pre and Pixi for $1.2 billion.

Palm (PALM) shares climbed $1.11, or 24%, to $5.74 after H-P said late Wednesday it would acquire Palm for $1.2 billion. The deal values Palm at $5.70 a share.

The acquisition brings an end to months of speculation that Palm was exploring options such as putting itself up for sale. The company had recently banked much of its future on the success of its webOS smartphone operating system, but lackluster sales of its newest phones hastened the company's decline.

H-P (HPQ) shares gave up 54 cents to $52.76.

Motorola Inc. (MOT) put in a strong performance, rising 36 cents a share, or 5%, to $5.74 after the company reported a first-quarter profit before the market opened. Motorola said its results were helped by shipping 8.5 million handsets, including more than 2 million smartphones such as the Droid.

Other gains came from Apple Inc. (AAPL), IBM Corp. (IBM), Cisco Systems Inc. (CSCO), Yahoo Inc. (YHOO) and Google Inc.

The Nasdaq Composite Index (RIXF) rose more than 12 points to 2,484, while the Morgan Stanley High Tech 35 Index (MSH) edged into positive territory. The Philadelphia Semiconductor Index (SOX) slipped into the red.

Decliners included Dell Inc. (DELL), EMC Corp. (EMC), Microsoft Corp. (MSFT), Oracle Corp. (ORCL) and Broadcom Corp. (BRCM).