There are two things that Palm owns that are of true value: webOS and a giant bucket full of patents. Either would be good reason for a larger competitor to purchase Palm, and according to some analysts, either is good reason to declare Palm to be undervalued (Palm stock plus Elevation Partner’s 1/3 share equals approximately one billion dollars).
That Montana-sized basket full of patents is good for several things. Especially when that basket of patents contain things like "Integrated Handheld Computing and Telephony System and Services," i.e. smartphone. For one, Palm can claim royalties when other companies use that patent. It also, at least to this point, has served as a barrier against most serious patent infringement cases (Hello, Cupertino). Having a lot of patents is also good for something else: when those patents are licensed by many companies, it gives the holder significant value. Palm’s veritable trove of patents has lead PatentVest CEO Anthony Mazzarella to declare to Investors Business Daily that, “Based on our metrics, the value of Palm’s intellectual property is along the same order of magnitude as Apple. The market is overlooking the IP value in Palm, which has great value.”