Gary, right on all points. I think the reason to buy now is that the full value of Palm IS NOT YET priced in. After all, the spinoff was announced back in September and it took two months for the market to wake up. I thought that after the announcement the stock would gap up at least 5 points. When it did not I pinched myself and bought calls like there was no tomorrow.
I think that at this point the market has still not priced in the palm.net potential with the associated web-clipping technology, which is Palm proprietary and competes directly with WAP -- the industry standard.
With Aether using web clipping on the millions of Palm V already on the market as well as with Palm VII, web clipping may become a defacto standard. Already many interesting sites are converting to it, to support Palm VII and Aether. On the other hand WAP-based mobile phones are not selling well at all. Just to give you an idea of the valuation possibility here, Phone.com (PHCM) has nearly an $8 Billion market cap on the basis of their WAP and associated browser expertise -- they have revenues of $8.5 million. So you can add a cool $8+ Billion to Palm's valuation, if the tech market continues to be as crazy as it is today.
I also don't think that most of the value of palm.net is priced in. Every Palm VII is an almost certain palm.net subscriber. Wait till Palm starts publishing monthly subscriber figures ala AOL. And palm.net customer acquisition model is one to kill for. Instead of laboriously chasing down a customer with multiple expensive mailings (I regularly get AOL subsription packages complete with CD-ROM, which I throw immediately away), customers flock to it attracted by the cool PDA -- actually the Palm VII is based on the relatively ancient Palm III and must have a mfg cost of well below $100, yet lists for $499.
Lastly, 3Com is an equal partner to Aether's OmniSky in addition to owning 10+% of Aether. Aether has a $2 Billion market cap. 3Com's share should be worth that much too. I don't think this has been priced in either.
So in conclusion, I think the market has priced right now the very concrete and measurable Palm hardware and most of the Palm OS. Palm.net, web-clipping, and OmniSky are not yet priced in.
Hey, maybe I should buy back some COMS :-) |
