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

To: hitesh puri who wrote (29296)	3/26/1999 9:59:00 PM
From: George Elliott	Read Replies (2) \| Respond to of 45548

Of the 907 contracts today, 282 were bought after the bell. Interesting call activity. Any comments from more seasoned investors?

To: hitesh puri who wrote (29296)	3/27/1999 10:33:00 AM
From: Bridge Player	Respond to of 45548

Exactly right, Hitesh. And one of these days the frenzy over these companies will end and the pickings on the short and put side will be fabulous. Meantime we just wait and hold value companies like 3COM. BP. << Therefore the fair value of COMS taken as a sum of its parts = 14000/375 = 37.33 / share. To me that is the minimum buyout price with no premium and by extrapolating revenues of a down quarter. But who says WS looks at value. It wants momentum and jazz and is ready to shower 50,100,200 times revenue multiples on companies who have yet to print their first annual report. -Hitesh >>

To: hitesh puri who wrote (29296)	3/27/1999 3:07:00 PM
From: jim bender	Read Replies (1) \| Respond to of 45548

Is 3Com down sizing? Bruce has taken a control. He is going to merge money losing divisions. He is moving Key people around and even out of company. R & D, Marketing expenses on slow growth & low margin products will be big time reduced and there will be layoffs at NIC, Modem, Router & Access product divisions. More resources will be allocated to high margin & high growth products.

To: hitesh puri who wrote (29296)	3/27/1999 5:55:00 PM
From: Patriarch	Read Replies (1) \| Respond to of 45548

Hitesh, thanks for the analysis. Funny, I've been in the process of doing the same thing. I've been lurking here for the past few weeks and seen COMS as a value play. I went long COMS just yesterday. Perhaps we can exchange ideas: Systems Division - 700 M per Q x 4 = 2800 M / Year A company solely providing LAN/WAN Core/Access systems even in the doldrums like FORE and NN gets a market cap averaging 3.5 times annual sales. So Market cap for Systems Division = 2800 x 3.5 = 9800 M In regards to NN, taking revenues for the past four quarters yields a Price/Sales ratio of 4.29. Looking at FORE in the same manner yields a P/S of 3.61. Wait until FORE gets acquired, looks like any day now. Taking this into account with a 15% premium for the takeover yields a P/S of 4.15. For the sake of argument, taking a multiple of 4.0 for the COMS unit - 2800 x 4.0 = 11200M Client Access Division - 600 M per Q x 4 = 2400 M / Year A mature and slowing growth division like this should only get a multiple of 0.5. So market cap for the Client Access Division = 2400 x 0.5 = 1200 M Question, granted this is a slow-growth vehicle, but a Price/Sales multiple for the unit below 1.0. Are the margins for this type of business fairly low? On a conservative basis, I put P/S for the division at 1.0, with a valuation of 2400M. Handheld Division - 100 M per Q x 4 = 400 m / Year Fastest growing and most exciting prospect product division can definitely get a multiple of 5. Hence market cap for Handheld division = 400 x 5 = 2000 M We agree on the multiple. I read on the thread where the Palm unit accounts for approximately 10% of COMS's revenues. Taking this as a guide, with the last four quarters ending with the 3Q, revenues were 5732M. Thus a revenue estimate of 570M for Palm Computing and 2850M for the unit. I think this is a fair assessment. Cash and Equivalents (conservatively less than actual) = 1000 M As per 3Q release, cash on hand is 981.52M (Not to quibble) :) Ergo the following breakdown: Systems Division: $11200M Client Access Division: 2400M Handheld Division: 2850M Cash and Equivalents: 982M TOTAL $17432M Number of outstanding shares (diluted) as per last report = 374.7M shares. Represents fair value for COMS = $46.52 / share. Granted the above accepts ideal conditions and represents a nearly 100% markup to what MM's value COMS. What do you think? Any and all comments are appreciated. Perhaps we can all chip in and get a more focused picture. Regards, Pat