Is 3Com a takeover
target?
By Dawn Kawamoto
Staff Writer, CNET News.com
September 28, 1998, 4:40 p.m. PT
As speculation mounts that 3Com may
be an acquisition target of chip giant
Intel or Lucent Technologies, insiders
at the networking company have been
refraining from selling their shares.
"Either the stock is undervalued at its
current share price, or insiders are
prohibited from selling now," said
Craig Columbus, an insider trading
analyst with Disclosure. "The insider
activity has the company looking like a
potential takeover candidate."
3Com insiders have sold only 1
million shares to date, at $31.56 and
$35.38 per share. Since May, only one
insider, chief financial officer
Christopher Paisley, has sold stock in
the company. That sale amounted to
10,000 shares.
Compare those figures to last year's
insider sales at 3Com, when nearly 4.8
million shares were sold at prices
ranging from $40.31 to $78.88 per
share. Those sales included
divestitures by former US Robotics
insiders after its merger with 3Com
closed, but also were low when
compared to the 98.3 million shares
sold in 1996, Columbus noted.
A spokesman for 3Com said the
company does not comment on
acquisition rumors. He said 3Com
executives were not immediately
available to comment on the slowdown
in insider sales.
A couple of weeks
ago, 3Com's
shares rose 2
points to 27.3125
on speculation that
Intel would buy
the company. The
shares have
continued to rise,
closing at 32.25
today, up .1875
over Friday.
Peter Andrew, an analyst with AG
Edwards, said it is possible--but not
probable--that Intel or Lucent will
make a bid to acquire 3Com.
"A Lucent or Intel acquisition would
make sense, but the wild cards are the
NIC and modem business," he said,
noting that regulators could raise
antitrust questions if either scenario
came to pass.
In its second quarter, Intel held 36
percent of the 10/100 network
interface cards market, while 3Com
held 53 percent. Combined, the
companies would represent a
whopping 89 percent of that market.
Lucent, meanwhile, is the
second-largest supplier of digital
signal processor chips, while 3Com
receives its supply from Texas
Instruments, the largest supplier.
Andrew noted that a third scenario
also is a remote possibility. Intel or
Lucent could move to acquire only
3Com's system business and then sell
off its client business, he said.
Regards
Neil |
