3Com/Palm: David's opinion
Thanks David!
"As I noted in my previous post to DMA, while it's positive for PALM, I think the PALM addition/COMS addition is a net negative to the present COMS/PALM combo due to the fact that the S&P index funds will have to buy only a small amount of PALM but shed 27 million COMS.
But the after hours action indicates that the market hasn't sorted this one out yet, and psychology may actually play a greater role than reality.
I think I gave my thoughts to your Q1 in an earlier post:
Message 14052847
As far as your 2nd Q is concerned, I'm not sure why COMS management would see any pressing need to buy back COMSV right now. Self interest as Julius believes? Maybe, but just from a business perspective, why spend $1 billion of the company's cash now when they they don't know where things will wind up on 7/27? If the market gets COMS to a reasonable valuation for them, all they have to do is take care of the employee option dilution over the next 3 Q's of operating losses.
The fact that only 26% of the vested and exercisable employee options got exercised prior to 7/11 means that the exercising of the present unvested 24.1 million (soon to be around 135 million or so) employee options will be a gradual and not a sudden process. And the 9.7 million (soon to be 55 million or so) employee options that are presently vested and exercisable will be transparent on the income sheet until COMS makes a profit sometime next year.
I'm sure the COMS bashers in the financial press will continue to make hay out of this, but I really think that from a practical perspective, it's not that important.
JMO.
David T.
P.S. What the hell else do we need? COMS shares, two parallel sets of COMS calls and puts, PALM shares, PALM calls and puts, COMSV, PALMV, arbitrage coming out the wazoo for 5 months, and now S&P addition/ejection. They should give us all diplomas after we graduate from this god awful mess. The big and most important plus (from a personal viewpoint) is that when all is said and done, I'll have made a bundle off the entire three act farce! What more can an investor want? And as my broker said today, "if it wasn't fun, we wouldn't be doing it".
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