3Com Sets Plans to Spin Off
Palm Unit as Independent Firm
Company Will Sell 20% of Palm in IPO,
Distribute Rest of Shares to 3Com Holders
Dow Jones Newswires
SANTA CLARA, Calif. -- 3Com Corp., maker of the popular Palm Pilot
handheld organizer, on Monday announced a restructuring under which its
Palm Computing unit will become an independent company.
3Com, whose main business involves
manufacturing computer-networking
equipment, said that as a separately
traded entity, Palm Computing can better
capitalize on a new industry of handheld
computers. The restructuring also will
allow 3Com to focus on building network
and Internet products and services.
3Com plans to sell 20% of the Palm unit
in an initial public offering early next year and to distribute the balance of
the shares of Palm to its holders. Under the present plan, 3Com
shareholders will own stock in both companies.
"The device business was an interesting first phase to enable the markets,
but [now] we're looking at platform licensing, enterprise-computing
solutions and services ... and the creation of a vibrant portal opportunity
for users to meet on the Net," said Eric Benhamou, chief executive of
3Com, in an interview on CNBC.
The Palm Computing unit represented about $570 million, or 10%, of
3Com's 1999 sales, the company said. 3Com reported fiscal 1999 sales of
$5.77 billion. In June, 3Com's Chief Executive Eric Benhamou said he
expected the unit's business to grow to 25% of revenue within a year.
Palm claims a world-wide market share of 68%, according to data from
research firm IDC. In the U.S., 3Com said Palm's market share is 73%.
Palm Computing intends to focus on handheld
operating system licensing, enterprise
computing software, wireline and wireless
Internet services, portal sites and Palm-branded devices, such as its series
of Palm handheld units. 3Com will be a licensee of the Palm unit's
technology.
What 3Com calls "the Palm economy" also includes independent software
developers, operating system licensees, strategic alliance partners and
hardware original equipment manufacturers.
James L. Barksdale, managing partner of the Barksdale Group and a
3Com director, along with Gordon A. Campbell, president and chairman
of Techfarm Inc. and a 3Com director, will move to Palm's board,
according to 3Com. Other board and executive management appointments
will be announced prior to filing the unit's initial public offering registration.
In August, Robin Abrams resigned as president of Palm Computing after
less than five months on the job and was succeeded by Alan Kessler, 41
years old, senior vice president of its customer-service organization.
Abrams resigned to "pursue another business opportunity." |
