3Com Corporation (COMS) Message Board

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Technology Stocks : 3Com Corporation (COMS)

COMS 0.00130

-23.5%

Nov 7 11:47 AM EST

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To: W.F.Rakecky who wrote (43940)	7/15/2000 10:10:49 AM
From: twillowy	Read Replies (2) of 45548

From Barron's July 17/00: 3Com surged 17 to 73 5/8 last week, but its advance actually may work against shareholders once the company spins off its large interest in Palm later this month, because 3Com's options outstanding could explode, diluting earnings. 3Com's advance was entirely due to Palm, which rose 14 3/8 to 45 1/2 . 3Com said Friday that its holders will get nearly 1.5 Palm shares for each 3Com share on July 27 -- a distribution worth $67 per 3Com share based on Friday's closing price. As noted in this space last week, 3Com will increase the amount of its employee options based on the ratio of 3Com's stock price on July 27 to the price on July 28, when a Palm-less 3Com will reflect just 3Com's networking business. Based on the when-issued trading prices of 3Com and Palm Friday, the employee options outstanding could balloon to 200 million from the current 33 million, diluting existing holders. 3Com now has 358 million shares outstanding. 3Com's when-issued stock finished Friday at 13, an attractive level in the eyes of some investors because of the company's $3 billion in cash, and growth prospects in newer businesses. But the option overhang could pose a big problem, especially if Palm keeps rising. The when-issued 3Com stock trades for $5 a share above the theoretic value of the 3Com "stub" because of the difficulty faced by arbitrageurs in shorting Palm to create the stub. Comments please... twillowy

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