Bono set for small profit

U2 singer Bono is set to make a small profit from the sale of smartphone-maker Palm to Hewlett-Packard as part of a €900 million deal but analysts say he won’t be happy with the return.

Bono is an investor with venture capital firm Elevation Partners, which has invested about $460m (€347m) in Palm since 2007, but is set to turn a profit of just $25m (about €19m) on its sale. Bono co-founded the firm with Roger McNamee.

The small profit from the deal is not the kind of gain that investors in private-equity firms expect, according to Steven Kaplan, a professor of finance at the University of Chicago Booth School of Business.

“They placed a very big bet on this one,” he said. “Getting your money back is OK, but it’s sure not the outcome they had hoped for when they made the investment.”

The deal is part of computer giant’s HP’s efforts to establish itself in the smartphone market, using Palm’s webOS operating system as a springboard.

HP will pay $5.70 a share, considerably lower than the $18.09 they reached last year following the release of the Palm Pre handset.

Last year Palm unveiled a well-reviewed touch-screen phone, the Pre – but it did not hit its sales target.