3Com Corporation (COMS) Message Board

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Technology Stocks : 3Com Corporation (COMS)

COMS 0.00170

-19.0%

Dec 26 9:30 AM EST

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To: Mehrdad Arya who wrote (39239)	2/13/2000 1:22:00 PM
From: David E. Taylor	Read Replies (1) of 45548

Mehrdad: I don't disagree with you on COMS fair valuation being closer to 45 than 35, but I've seen valuations all the way from 25 to 45, presumably because some people just look at the cash flow and growth in the underlying business and pay less attention to the balance sheet, while others take a "sum of the parts" approach like you do. Also, many companies carry their investment assets on the books at cost (until sold), because the gains are unrealized -- I don't know if 3-Com does it this way or they carry them at market value. In its usual way, the market seems to price companies somewhere in the middle of the two extremes, but rarely at the upper end. There are many companies with assets that when added up should result in a share price much higher than they trade at -- GM and SEA come to mind, but that value doesn't get unlocked until some of the assets are spun off or the company is broken up. So I stick with my 35/share for COMS until they show some Q/Q improvement in revenues and earnings. I agree that the potential is there, particularly for the cable/DSL modem business -- here on LI/NY, Cablevision has standardized on 3-Com NICs/cable modems for its internet broadband roll out. I also think PALM will trade much higher than $40, though I doubt COMS will get towed along at the 1.5:1 ratio. This is going to be one interesting IPO. I can't find any instance where the spin-off child has a much larger market cap than the parent company. The next two weeks could be the first time we see volatile trading in an IPO (through its parent) prior to the actual IPO date. I wonder if a lot of the action will be over by 1/29?? David T.

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