Gary:
COMS is focusing on the three remaining markets it's still in: the carrier business, the SOHO market, and the consumer business. VOIP, 3G, DSL/Cable, LAN's, etc. They still have the Total Control line. Street reaction mainly seems to be "wait and see", which is mine also. Typical recent article (posted by Greg):
news.cnet.com
I waited for the COMSV to get down to around $12, which it did before the 7/27 PALM D-Day, and bought a bundle, figuring the downside was small, and the upside was $15 minimum, $20 maximum near term. So far it's been a good trade, still have some but plan to exit all this week, then sit back and keep an eye on COMS for a break out, which will probably not occur until after a few Q's earnings show they're on track.
Cash value is around $9, book value around $13, toss in the remaining business at 1x $3.6 billion sales, and you have a $20+ valuation, which seems to be in the middle of the consensus range. Employee option dilution (as a result of the PALM spin off) has caused the diluted share count to rise to 418.7 million, but COMS is committed to buying back $1 billion worth.
At $17-$18, my view is that there's a short term downside risk to $14-$16 (weak market), longer term upside to $20+ (strong or OK market). But I think that stock price appreciation past that is several Q's away. The street's not going to cut 3Com any slack until they "show the money".
All JMO of course.
David T. |
