OK guys, speaking of Palm, I think 3Com handled the Palm IPO very well. I have carefully read the objections and counterproposals on this board and find them unconvincing. Here is why I think that both the announcement and proposed execution of the IPO is the best way to maximize value for COMS shareholders:
Revenue growth for Palm has been consistent at 100+% over the past 3 years. WS will be watching like hawks the Palm numbers in the next couple of quarters. I am almost certain that the 100+% revenue growth rate will be confirmed resoundingly -- and the longer the growth, the more valuable it is. Additionally, because of Palm VII and palm.net, earnings will also be spectacular. This will establish Palm as a company with sizzling growth rate in both revenues and earnings, a rarity in today's IPO market.
The test marketing of Palm VII and palm.net appears to be a big success, based on anecdotal evidence -- can't find Palm VII easily in the NY test market, people willingly pay large amounts of money for palm.net service, large brokerage houses signing up for online trading with Palm VII, cabdrivers using their PalmVII to trade. This makes it very probable that the nationwide roll out of Palm VII and palm.net will be a big success too. Therefore, at IPO time, Palm will not be viewed as strictly a hardware company that also owns Palm OS, but a potential "wireless AOL". This will ensure a spectacularly successful IPO -- Palm clearly does NOT have this "wireless AOL" element now.
I am amazed that people here worry about not being able to participate in the "pop" on the day of the IPO. Palm is not some fly by night internet company with no revenues and no profits whose stockholders' only chance at making money is getting their stock at IPO prices and selling it on the first day's pop. Palm has a 70% market share of a sizzling market and has defied all predictions of its demise at the hand of Microsoft. I firmly believe that Palm will continue to rise long after the IPO, just like any serious high growth company. It is the rise that occurs AFTER the IPO that is helped by the relatively small float of Palm shares in the initial few months -- anybody that wants to participate in wireless PDA and wireless internet will have to buy PALM, since it will be the only pure wireless PDA and internet play. It is this supply-demand dynamic that is crucially affected by the float available initially.
If the Palm shares do indeed continue to rise after the IPO, as I expect, there will be little incentive for COMS shareholders to sell when they get hold of their Palm shares a few months later.
Finally, as has been noted here, the IPO puts a strict time limit for any move to acquire COMS. If there are serious COMS suitors, they will have to act before the IPO is done, if they want to take advantage of pooling of interest accounting rules. So, the IPO announcement will force the hand of any potential acquirers -- isn't this what many on this thread want? |
