Tim, frankly, I don't quite understand your complex argument. My thinking about it is, I believe, somewhat simpler. Here it is:
Up to 20% of Palm shares will be sold to the public in the IPO early in 2000. 3Com will hold the remaining 80+% of the Palm shares and distribute them to 3Com stockholders as a stock dividend (i.e. free) a few months later -- this wait is necessary so that the IRS can rule that the distribution is tax-free.
The Palm share price, IMO, will rise steadily through the months and years following the IPO. Palm is a quality company that combines characteristics of Dell/Compaq/Microsoft/AOL in the wireless device market. The wireless device market is expected to eclipse the PC market within a few years.
So, 3Com shareholders will own 80%+ of a very valuable Palm whose value will probably increase with time, while at the same time owning the rest of 3Com as well.
Please, don't confuse me with actual numbers. I don't think they are relevant. The key number is 80%. That's the percentage of Palm that 3Com stockholders will own after the distribution. The fact that we may not participate in the sale of the initial 20% is, IMO, a small price to pay for letting the market decide the price of Palm, and getting the favor of the investment houses that will underwrite the IPO. |
