3Com Corporation (COMS) Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : 3Com Corporation (COMS)

COMS 0.00130

-18.8%

Nov 7 11:47 AM EST

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: kcmike who wrote (43945)	7/15/2000 12:09:15 PM
From: Rajiv	Read Replies (6) of 45548

Dilution from options - Current # of outstanding COMS shares = 358.5 million # of COMS outstanding options = 37.3 million # of COMS options held by PALM employees = 3.5 (these will get converted to PALM options) Net # of COMS outstanding options = 33.8 million Options which are immediately exercisable = 9.7 million Current average strike price = $27.48 opening price of COMS on July 28 Ratio = --------------------------------- closing price of COMS on July 27 Post-distribution data # of COMS outstanding options = 33.8/Ratio New average strike price = $27.48 * Ratio If we make the assumption Closing price of COMS on July 27 = 73.625 Opening price of COMS on July 28 = 12.9375 Ratio = 12.9375/73.625 = 0.1757 New number of COMS outstanding options = 33.8/0.1757 = 192 million New average strike price = $4.829 If we make the assumption Closing price of COMS on July 27 = 100 Opening price of COMS on July 28 = 13 (possibly caused by a massive short-squeeze in PALM) Ratio = 13/100 = 0.13 New number of COMS outstanding options = 33.8/0.13 = 260 million New average strike price = $3.572 If we make the assumption Closing price of COMS on July 27 = 50 Opening price of COMS on July 28 = 13 (possibly caused by PALM dropping in value) Ratio = 13/50 = 0.26 New number of COMS outstanding options = 33.8/0.26 = 130 million New average strike price = $7.145 Summary Assuming COMS opens at 13 on July 28 Coms on July 27 # of COMS outstanding Avg Exercise price options 50 130 7.145 73.625 192 4.829 100 260 3.572 COMS is planning on using a billion dollars to buy back its stock to to offset shares created as a result of employee's exercising stock options and employee stock purchase plan requirements. If options are exercised, COMS receives additional cash. How many shares can COMS buy ? SAR = Market value - Exercise price # of shares which can be bought back = 1 billion divided by the SAR Also, COMS is part of the S&P 500. PALM is not. The PALM shares showing up in the index fund accounts will be sold at the close of July 27 and/or open of July 28. Moreover S&P 500 is market-cap weighted. At the next rebalancing, COMS' weighting will get reduced which will in turn cause the index funds to unload part of their holdings. Regards, Rajiv

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next