Some folks on this thread were quoted anonymously in today's online wsj:
December 16, 1999
Overheard:
Investors Are Bullish on 3Com
But Analysts Remain Neutral
By CARRIE LEE
THE WALL STREET JOURNAL INTERACTIVE EDITION
Online investors are excited about 3Com's plan to spin off its Palm Computing division and sell a minority stake to Motorola, Nokia and America Online.
3Com's stock surged 13% on Tuesday, a day after the company filed for a public offering of the Palm unit, which makes the most popular hand-held electronic organizer, and unveiled other plans for the business.
But some Wall Street analysts seem to think the news-driven frenzy may have been too exaggerated. Amid the excitement, one analyst actually downgraded the stock and others maintained their neutral rating.
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A dramatic rise in 3Com's stock coupled with the fact the company had already disclosed plans for the spin-off of its Palm division gave analysts reason to temper their reaction.
The stock-price increase, especially since last month, already has pushed shares of the Santa Clara, Calif., networking company to an optimistic level, says Matthew Barzowskas, an analyst with First Albany Corp.
Shares of the company retreated 2 9/16 to 48 1/16 Wednesday on the Nasdaq Stock Market after hitting a 52-week high of 52 3/16 on Tuesday. The stock traded at 28 5/8 at the start of November.
"The good things 3Com has been doing to target more value for its shareholders have been reflected in its stock price," says Mr. Barzowskas, citing the Palm spin-off as one of them.
Mr. Barzowskas kept a "neutral" rating on the stock. Another analyst, Patrick Houghton, of Sutro & Co., downgraded the stock. Mr. Houghton didn't immediately return telephone calls Wednesday.
Most of the analysts who follow 3Com have long been cautious on the stock. Of the 28 analysts who follow the company, 16 maintained a "hold" recommendation on the stock during the past three months.
3Com plans to sell $100 million in stock under in the spin-off Palm next year. The company has said it will sell about 20% of Palm to the public and retain an 80% stake, which it will distribute later to shareholders.
"We believe there is a tremendous amount of locked up value in Palm, doing this gives Palm the opportunity to realize that value," says Brian Johnson, spokesman for 3Com.
Online investors are excited.
"Palm is going to be a huge IPO. With the initial low float and the name recognition it is a sure bet," wrote one investor on a Silicon Investor message board (www.siliconinvestor.com). "I am even starting to think that the 3Com side of this may not be all that bad either."
"I believe that any price below $50 for COMS will be viewed in one year as an unbelievable bargain," wrote another. "I never thought I would buy more COMS, but if I can get it at less than $50 tomorrow (Tuesday) morning, I will."
In the spin-off, Motorola, Nokia and AOL have each agreed to purchase as much as 1.5% of Palm as part of licensing and marketing deals. Motorola will license the Palm operating system for new wireless devices and AOL will offer online services on Palm devices. Nokia already had announced plans to put the Palm operating system on some cellular phones.
The deal will allow Palm to be used in wireless phones made by two leading cell-phone makers. It also gives the company in a good competitive position to become the standard for hand-held wireless Internet devices.
Some online investors aren't too optimistic about the company's prospects. "Congratulations to all the patient investors who have been holding this dog for the last 2 years and now have the opportunity to sell it and buy some bargains today or tomorrow. I did," posted one disgruntled investor. "Come January and investors will bail out of COMS."
----- snipped out a discussion of VRTY --------
Write to Carrie Lee at carrie.lee@wsj.com.
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