<<Perhaps some of the more sophisicated posters can explain to me
why coms is not now worth at least $70. 1.5 x
the value of Palm (say $30) + the value of coms
w/o palm (say $25) would = $70.
Please tell me how this is not reasonable if not conservative (palm could/should easily shoot higher) I look forward to all responses.>>
The important thing here is the respective market caps of PALM and COMS. Currently, as one combined company, COMS has a market cap of ~$16.3B. If the IPO goes out for PALM at the $15/share price (unlikely), PALM would have a market cap of $8.55B, and COMS would have a market cap w/o PALM of $7.75B. This would give COMS a post-PALM (six months from now), price of $22.
I think PALM will be valued at around $20B, based on its OS potential and the wireless buzz. COMS is fairly valued at $7.75B, based on its perceived weaknesses in the systems business and its flat growth. Still, if PALM goes out at $20B - the sum of the two will be $27.75B, as compared to $16.25B today.
What does this mean share price wise. Forget about PALM's share price, and COMS share price post PALM. If the above is realized and PALM goes out at $20B, a share of COMS that is $46.50 today will be worth $78 post IPO.
Once the companies split the sum of the two share prices will be equal the previous combined number. If it's $78 per the above example, after the split, PALM will have a share price of $35, and COMS will have a share price of $22. Every one share of COMS today will be worth 1.55 of PALM (1.55 X $35 = $54.25) and $22 of COMS, for ~$78.
The key to your investment is the market cap that the street places on PALM. Nothing else really matters. |
