3Com's minority holdings in the following companies: JNPR, AETH & EXTR ($30 billion dollar market cap), amounts to $1.8 billion dollars. Their 13% of AETH should add on approx. $500 million to their net assets for this quarter. The company's venture capital division has done a wonderful job and if this is indicative of what is to come of their other ventures, such as, FusionOne, No Wires Needed, Omnisky and numerous Israeli start ups we will be sitting on an unbelievable treasure trove. Now add this to their future in the Emerging markets (growing at 47% sequentially, Q on Q) of VoIP, LAN telephony, Home Networking (with MSFT), Broadband (Cable, DSL & CDMA broadband), Wireless and last but not least, 93% holdings in the PALM (Devices, Software, OS, Wireless) and what you have is a table pounding winner. Don't forget that from the initial public offering of the Palm they will also be the recipient of approx. $450 million.
Also remember that 3Com (Market Cap. $17 billion, Book value of $10.3, institutional ownership @42%, cash flow/share 3.5) spends $600 million a year on R&D and has more cash and patents than Cisco (Market Cap. $400 billion, Book value $4.2, institutional ownership @59%, cash-flow/share 1.2). Predicated on the aforementioned fundamentals and most multiples such as P/E, P/S etc. 3Com has phenomenal potential.
3Com's volatility can to a certain degree be imputed to the % institutional ownership. You will notice that only 42% of the company is owned by institutions compared to Cisco's 59%. This also manifests why there is a biased toward Cisco but God forbid if Cisco doesn't churn the right numbers you will see dumping like you never have seen in you life and I mean LIFE. I personally think this day of reckoning is looming in the horizon. What else do you expect of a company with a P/E of 200. When you put a person or company on a pedestal all that can happen is that it falls. |
