3Com's Palm Doubles Price of IPO Shares to $30-$32 (Update1)
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Santa Clara, California, Feb. 28 (Bloomberg) -- 3Com Corp.'s
Palm Inc. electronic organizer unit expects to raise as much as
$736 million from its initial sale Wednesday, double its original
estimate.
That would value Palm at $18 billion, almost as much as Apple
Computer Inc and J.P. Morgan & Co., for the roughly 4 percent
stake, or 23 million shares, that 3com is selling off at $30-32
per share.
3Com plans to spin off the rest of its Palm stake to 3Com
shareholders in six months. Palm's shares will trade under the
symbol PALM on the Nasdaq Stock Market starting Thursday, after a
sale led by Goldman, Sachs & Co.
This is ``almost a no-brainer,' said Irv DeGraw, research
director at WorldFinanceNet.com in Sarasota, Florida, which
provides news and investment advice for individual online
investors.
More than 5.5 million Palm organizers have been sold in the
four years since the electronic notebook PalmPilot was introduced.
Consumers use a stylus to input addresses and appointments on the
device's liquid-crystal screen, which connects to a personal
computer to retrieve information and programs.
Palm's sales rose 76 percent to $259 million in the quarter
ended Nov. 26. Net income rose 58 percent to $12.9 million.
Lofty Forecasts
``I haven't seen this much enthusiasm for a public offering
since Netscape,' said David Powers, an analyst at retail
brokerage Edward Jones in St. Louis, who rates 3Com shares a
``hold.'
Shares of Netscape Communications Corp., maker of the once-
dominant Internet browser, more than doubled in their first day of
trading in August 1995. America Online Inc., the world's largest
online service, bought the company in March 1999 for $9.8 billion
in stock.
Many Internet and computer-related IPOs surge when they
begin trading because they sell relatively small stakes, so demand
often outstrips supply. The initial, first-day surge is, however,
no guarantee of future success. Some well-publicized Internet IPOs
have peaked in the first weeks or months of trading, only to fade
thereafter.
3Com ``might not be quite as explosive as the others, but it
will have room to move up,' said Eric Efron, co-manager of the
$2.3 billion USAA Aggressive Growth Fund in San Antonio. Efron
said he's interested in buying Palm shares.
Investors are betting that Palm will keep its lead in the
organizer market with easier-to-use devices and benefit from
licensing its software to companies such as Nokia Oyj, the world's
largest cell-phone maker, and consumer-electronics maker Sony
Corp. for use in new wireless devices.
``Their move into wireless is an extremely astute move,'
said DeGraw of WorldFinanceNet.com. ``They've got the lead and
they're not looking back.'
3Com and Palm are based in the same corporate campus in Santa
Clara, California.
Morgan Stanley Dean Witter & Co., Merrill Lynch & Co., and
Robertson Stephens are managing the sale.
Whoopee!!!
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