Mike:
This concern over expansion of the COMS share count after 7/27 has been aired in a couple of press articles that have been posted, but I'm not sure if anyone's really focused on it, other than 3Com themselves.
By my reckoning, there are around 24.4 million COMS unexercised employee options outstanding. If COMS/COMSV prices remain where they are at say 65/14, those 24.4 options will become 113 million options on 7/28. COMS/COMSV go to say 72/14, you get to 125 million options. 3Com's buy back authorization could take care of only about 50% of those numbers.
What effect will this have overall? Darned if I know, but maybe not much right now, since the effect will be a future one on COMS EPS, with zero effect on PALM. Since it's PALM that's pushing this boat, the future increase in COMS outstanding shares when these employee options become exercisable would not seem to matter. Also, since COMS will have negative EPS for the next 3 Q's, a higher share count will actually reduce the EPS loss, so it could even be seen as beneficial!
David T. |
