It's refreshing to know that I'm not the only one that doesn't know what he's talking about.
Todays Merc. Note the last couple of paragraphs.
mercurynews.com
Palm's IPO a hot
commodity
BY JON FORTT
Mercury News Staff Writer
Want in on the IPO of a tech company that has a well-known
name, a wildly popular product and -- rare these days -- profits?
Good luck getting a piece of Palm Inc. The company that brought
the world the Palm hand-held organizers spins off as a public
company this week, and legions of everyday people who trade
stocks on their home PCs are looking for a way get in on the
action.
Palm, a subsidiary of 3Com Corp., plans to raise about $570
million by offering 23 million shares to ordinary investors and 15
million shares to three corporate partners: America Online Inc.,
Motorola Inc. and Nokia Corp. The shares will be priced between
$14 and $16, according to documents filed with the Securities and
Exchange Commission. 3Com will continue to hold 93 percent of
Palm for about six months, and then will hand over its stake to
3Com shareholders. 3Com stock has soared about 350 percent
since it announced the spinoff in September.
Anticipation is so high for the new offering that one analyst at
Edward Jones in St. Louis, a financial services firm, said he takes
as many as 10 calls a day from people who want in. Even
investment banks with lukewarm ratings on 3Com are getting
barraged with calls.
``It could easily be a $10-$12 billion company after one day,' said
Jeffrey Susman at Warburg Dillon Read in New York, which has a
hold rating on Santa Clara-based 3Com Corp. ``It's going to be a
hot deal.'
Only investors with influential friends in finance have much
chance of getting stock in advance of such a popular offering.
Andy Brooks, head of equity trading at T. Rowe Price in
Baltimore, said the last IPO that had the same name recognition
and excitement was United Parcel Service, which made its Wall
Street debut in November.
``A lot of individual investors who are not able to get shares in the
offering are buying 3Com right now so that ultimately they can
participate in Palm,' said David Powers, an analyst with Edward
Jones. ``It's pretty obvious by now that this is going to be one of
the hottest IPOs in the tech industry.'
Powers compared the pre-IPO mood to the hype surrounding
Netscape Communications Corp. when it went public. And that
comparison, while a compliment, is also a bit sobering.
Hype like Netscape's
While Netscape didn't have any profits to speak of when it went
public in August 1995, it controlled about 60 percent of the Web
browser market. Back then, Wall Street was just getting wise to the
idea that this Internet thing might be around for a while -- there
were even whispers that Netscape could be the next Microsoft
Corp.
Of course, things didn't work out that way. Microsoft Corp. has
snatched the lead in the browser wars; Netscape, while still
successful, has been swallowed by America Online.
Even more than Netscape did in the browser market, Palm today
has a commanding advantage in the hand-held computing arena.
Palm has about 75 percent of the hand-held market, and devices
running the Palm operating system made up a whopping 91.1
percent of hand-helds sold in U.S. stores in the fourth quarter of
1999, up more than 8 percent over the third quarter, according to
PC Data, a Reston, Va.-based market research firm.
But those numbers are likely to change over time. Palm executives
plan to shift the company's focus away from selling Palm devices.
Instead, Palm will become more of a software company, licensing
the Palm operating system to other companies that make
organizers and mobile phones -- and analysts say Palm will
probably lose hardware market share in the process.
Palm is not the first to make a hand-held computer, but it is the
first to have much success at it. In 1993, Apple Computer Inc.
began selling one of the first palm-size PCs, the Newton. Newton
turned out to be a much-publicized flop -- it cost too much and had
trouble recognizing handwriting. Apple CEO Steve Jobs killed the
project in 1998, as part of his turnaround of the once-troubled
company.
Palm did much better. The Palm Pilot was developed by Palm
Computing, founded by Donna Dubinsky and Jeff Hawkins, and
hit store shelves in 1996. More than 1 million units were sold in
the first 18 months. Dubinsky and Hawkins later sold Palm
Computing to U.S. Robotics, which was in turn bought by 3Com.
Palm's success was attributed to its easy-to-use operating system
and its accuracy in handling handwriting.
Those features continue to be credited with keeping Palm a step
ahead of competitors, and have helped the company sell 5.5
million Palm devices to date. The company had $29.6 million in
revenues last year.
``To me, it's huge when you have profits and you're the leader in
the industry,' said Jeffrey Hirschkorn, senior market analyst with
IPO.com in New York, a firm that follows the market for initial
public offerings. ``There really is no competitor to them, in my
book.'
Perhaps not yet -- but serious competition may be coming.
Handspring on horizon
Mountain View-based Handspring Inc., founded by Dubinsky and
Hawkins, has a hand-held device called the Visor that has sold
briskly over the Internet and is due on retail shelves soon. Though
the Visor runs on the Palm OS and could help solidify Palm's
market dominance, analysts say it could also take some wind out
of Palm's sails. The Visor retails for $150, about $100 less than the
cheapest Palm device.
And like Netscape, Palm faces a challenge from Microsoft, a
company that tends to start slow but eventually steamroll
competitors. The Windows CE operating system, designed to work
with hand-held computers such as Hewlett-Packard's Jornada and
Casio's Cassiopeia and others, has been called too unwieldy
compared to the user-friendly Palm OS. But Microsoft announced
last week that by summer it will introduce PocketPC, a simplified
Windows CE interface for hand-held devices.
Also last week, a consortium called Symbian, which includes
wireless companies such as Nokia, Ericsson and Motorola, said
that by Christmas it will offer a service allowing European cell
phone subscribers to get hand-held computing and telephone
services through one device, called ``Quartz.' |
