Could it be? Word on the street is that Nokia is mulling over the idea of buying Palm. Wowsers. Could you imagine the N97 or the N900 with WebOS?

From a business standpoint, it would make sense. When it comes to smartphones, BlackBerry and iPhone are tearing up the track. Android devices, by way of HTC or Motorola, is looming large in the headlines, especially lately. But Nokia has failed to generate buzz that’s even remotely on par with these devices. Palm, however, is low enough on the totem pole to make acquisition possible, but high enough — thanks to the Pre — that it could give a nice bump for Nokia. It would certainly help close some of the gap between it and the market leaders, says analyst James Faucette, of Oregon-based Pacific Crest Securities.

And Nokia’s already proven itself a willing buyer. The company nabbed Navteq last summer for $8.1 billion. Even after that hefty purchase, it still has about $9 billion left in the piggy bank, more than enough to put Palm in the old shopping cart.

PreCentral made some other good points about Nokia and the possibility of acquisition:

• The company could use some juice, and its S60-Symbian OS isn’t cutting it anymore, given its age and limitations
• The purchase would add to Nokia’s market share, with the Pre, Pixi, and — most importantly – WebOS being welcome additions to the product portfolio, as well as the Palm name
• The company would benefit from a better base in the U.S., where it has struggled to maintain a foothold
• From a valuation standpoint, the Finnish phone maker would also see gains in its stock prices**

As for Palm, depending on the terms, it could benefit from a larger R&D budget. Nokia soaks $3 billion into research and development, a figure that’s 10 times what the former PDA-maker invests in that department.

There are only a couple of things that could stand in the way of this deal. First, Jon Rubinstein: Palm’s top dog tends to like going it alone, and probably wouldn’t jump at the chance to be acquired. Second, what are the chances that Nokia is the only company eyeballing Palm? Even if Rubinstein and the company were amenable to being taken over, industry pundits think there could be other suitors who are privately interested.

For Nokia’s sake, if the deal happens at all, it should be inked as quickly as possible. Palm’s resurgence is still in its nascent stages. In the years to come, there’s potential for the Pre-maker to become a larger player in the smartphone market, which would make any takeover a tougher proposition and a more expensive one at that.

So that’s it for the “what if” scenarios. Back to the facts now. In reality, neither Palm nor Nokia would comment on this rumor. But that neither confirms nor invalidates the story, so like everyone else in the industry, we’ll have to wait and see what unfolds. Stay tuned.

[via PreCentral.net, Bloomberg.com]

** If you own any Nokia or Palm stock, you might be interested in the following tidbits, courtesy of PreCentral and Bloomberg:
Faucette also claims that while Palm stock is trading around $17, to Nokia it may well be worth $25 to $30 a share. Looking at the outstanding stock currently on the market, that would put the acquisition value at $3.96 billion - $4.75 billion (including the impending 16 million share secondary stock offering). If we were to factor in the ~1/3 of Palm owned by Elevation Partners, the hypothetical bid would balloon to $5.94 billion to $7.13 billion.

Palm stock was buoyed significantly by the news, rising 7.02% ($1.12) to close at $17.07, a new 52-week high for PALM. During the day shares traded as high as $17.50. Yesterday Palm surged 14% in a perfect storm of trading and news. Monday and Tuesday combined, Palm has risen 21.8%, and from the December 2008 lowest close of $1.42, at the close of trading [yesterday] Palm was up an astounding 911%.