Saying it intends to deploy the webOS mobile operating platform across a wide spectrum of wireless devices, tech giant HP today announced that it's coming to the rescue of smartphone maker Palm, Inc. (News - Alert)with a $1.2 billion acquisition.

In a Webcast that wrapped up moments ago, Todd Bradley, executive vice president of HP's personal systems group, called the deal strategically and financially 'transformational.'

'We believe that the acquisition of Palm is a transformational deal in the connected mobility market, opening up opportunities for further growth,' Bradley said.

'Today's announcement is very much about how HP will provide people a great experience as they increasingly live their lives online for work, entertainment and everything in between,' he added.

The announcement probably marks the biggest news to hit the mobility space since Apple (News - Alert) launched the iPhone or since Google decided to create the open source Android platform.

Palm, whose smartphones are powered by the Palm webOS mobile operating system, has struggled to find its place in a fiercely competitive market, and in the end apparently couldn't stand on its own.

The company had reportedly hired bankers recently to explore several options for the failing company, including the potential sale of the company. The smartphone maker's sales have suffered against rivals iPhone from Apple and BlackBerry from Research In Motion, and recent reports have pegged the mobile phone company as either going bankrupt or getting acquired within a year.

HP will purchase Palm, at a price of $5.70 per share of Palm common stock in cash or an enterprise value of approximately $1.2 billion. The transaction has been approved by the HP and Palm boards of directors, according to company officials.

For Palm, it seems the writing has been on the wall. Rumors have circulated for the past few months that with the company not turning a profit in battles with Apple and Research in Motion (News - Alert), its end was imminent. And last week, electronics retailer RadioShack Corp. quietly decided to stop selling Palm phones on store shelves as well as through its website.

Despite its shortcomings, Palm apparently has redeeming qualities. For starters, analysts told Reuters (News - Alert)that Palm is still worth $590 million in cash. It also has an established U.S. presence - two things HP could benefit from - especially the latter.

Company officials with HP said that the combination of HP's 'global scale and financial strength' with Palm's 'unparalleled' webOS platform will enhance HP's ability to participate more aggressively in the fast-growing, highly profitable smartphone and connected mobile device markets.

Here's how HP diagrammed the companies' respective strengths during the Webcast:

Palm's webOS will allow HP to take advantage of features such as multitasking and always up-to-date information sharing across applications.

HP officials said that Palm's current chairman and CEO, Jon Rubinstein, is expected to remain with the company.

'We're thrilled by HP's vote of confidence in Palm's technological leadership, which delivered Palm webOS and iconic products such as the Palm Pre. HP's longstanding culture of innovation, scale and global operating resources make it the perfect partner to rapidly accelerate the growth of webOS,' Rubinstein said in a statement. 'We look forward to working with HP to continue to deliver industry-leading mobile experiences to our customers and business partners.'

According to company officials, under the terms of the merger agreement, Palm stockholders will receive $5.70 in cash for each share of Palm common stock that they hold at the closing of the merger. The merger consideration takes into account the updated guidance and other financial information being released by Palm this afternoon. The acquisition is subject to customary closing conditions, including the receipt of domestic and foreign regulatory approvals and the approval of Palm's stockholders. The transaction is expected to close during HP's third fiscal quarter ending July 31, 2010.

During the Webcast, Bradley stressed that the company would leverage the webOS operating system not only for smartphones but for its Slate-brand tablet and especially its burgeoning netbook business.

'We intend to invest heavily in product development,' Bradley said.

(Editor's Note: Go to http://www.tmcnet.com for news analyses, market researchers' predictions and commentary on the HP-Palm announcement.)

Erin Harrison is a senior editor with TMCnet, primarily covering telecom expense management, politics and technology and Web 2.0. She serves as senior editor for TMC's print publications, including 'Internet Telephony', 'Customer Interaction Solutions', 'Unified Communications (News - Alert)' and 'NGN' magazines. Erin also oversees production of TMCnet's weekly iPhone e-Newsletter. To read more of Erin's articles, please visit her columnist page.

Edited by Michael Dinan