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Technology Stocks : 3Com Corporation (COMS) -- Ignore unavailable to you. Want to Upgrade?

To: renard fox who wrote (44252)	7/30/2000 12:28:23 PM
From: David E. Taylor	Respond to of 45548

Renard: New COMS options start trading (per the CBOE bulletin that has been posted here a few times) on 8/1. Have to wait and see where they set the strikes and premiums before deciding what (if anything) to do. IMO (and others) COMS is way undervalued at $13, short term it ought to get up at least to book value of around $13 to $15 (depending on whether you use the basic or diluted share count). Longer term, even if you assign the ongoing businesses a low 1x sales multiple, you can add around $9 to $11 per share to the book value, and you're up to $22 to $26 per share. Or if you like, forget the book value and assign the business a 2x sales (much less than the 4x to 5x sales for CS or APCC as posted earlier by PMF) and you're still well over $20/share. How long for that to happen? Depends IMO on a number of factors. Share option dilution has been one voiced worry, but we now know what that is, and COMS is going to buy back stock to lessen that dilution. Revenue growth for the remaining businesses has been the major concern, and IMO it's going to take a few Q's for the street to become convinced 3Com has a chance of doing what they say they will. Q1 closes 8/31 with earnings due the third week in September, if they meet the guidance they gave last Q, the street may begin to grudgingly give some credibility to 3Com going forward. If they don't, COMS will stay bottomed out. Overall, I think we might see the $15 level pretty fast, that's why I bought a bundle of COMSV at $12 1/4 in case the stock got there before 8/1 options trading. Longer term I feel sure we'll see $20 to $25, but when depends on the street's perception. If I do anything short term, it may be to sell the COMS and buy some longer term options/LEAPS to avoid tying up a ton of cash in the stock, but that will depend on the strikes/premiums they set. David T.