Palm is bigger than Apple, CMGi, and its parent 3Com...

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From: Adam Rifkin -4K (
Date: Sat Mar 04 2000 - 14:26:33 PST

Below are a pair of articles, one from Reuters and one from, exploring what it means for Palm to have a market cap of
$45 billion right out of the IPO... the first article is more
optimistic, the second more pessimistic (mostly due to comparison to

Interesting is that Palm is now worth twice to the world what Apple is.
I guess the Newton was just slightly ahead of its time, eh?

Also interesting is that of that $45 billion market cap, only $874
million in cash was raised by this offering. Anyone want to guess how
many billion the secondary will be worth to Palm? [Microstrategy, a $12
billion company, is having a $650 million secondary to pump up its service, so using that ratio we might expect a $2.5 billion
secondary from Palm sometime in the next year... whew... forget the idea
that Palm is in the wireless device production business. That idea is
bunk. Palm, like most other high tech businesses today, is in the
business of selling its stock...]

A third article appears below hinting at the offering of free real time
quotes accessible on one's Palm Pilot. I wonder what their idea of real
time is, in the context of wireless devices -- my MSN Mobile, Yahoo
Mobile, and Microstrategy information paging currently have ridiculously
unreliable latencies in getting stuff to me.

> Palm starts life as rich kid on the block
> March 3, 2000 8:00 PM EST
> By Dick Satran
> SAN FRANCISCO, March 3 (Reuters) - Palm Inc. (Nasdaq: PALM), one of the
> richest offspring ever in Silicon's rich history of success stories,
> turned disappointing in its first full day of trading on Friday.
> Palm fell 14-13/16 to 80-1/4, down 15.6 percent despite a surge in the
> Nasdaq composite index <.IXIC > of 3.36 percent.
> The stock was hit by concerns that Palm got too far ahead of the market
> value of its parent, 3Com Inc. (Nasdaq: COMS) in its first day of
> trading, as well as profit-taking and fears that its high valuation may
> have been fueled by technical factors, including a shortage of stock.
> But a number of analysts pushed out reports saying the strong stock
> market reception of Thursday bodes well for both Palm and its parent,
> 3Com.
> "Some people may have the notion that the stock price being too high is
> dangerous,"said Jonathan Ross of brokerage concern ABN Amro, which
> reiterated its buy recommendation on Palm. "But I can't see how having a
> strong stock price hurts them -- and in our view they are in a very
> solid footing in terms of valuation."
> Another broker, Leham Brothers, issued a report saying that the stocks
> of the parent and the newly public Palm unit needed to come into line,
> since the parent company is trading below the value of its Palm stake."
> The two stocks came a bit closer in value during the day, as the decline
> in Palm's stock trimmed its market capitalization to $45 billion from
> $53 billion, while 3Coms held steady at about $28 billion, edging up
> 1-1/4 to 83-1/16.
> But Lehman's report earlier in the day suggested that the two needed to
> move more dramatically to come into line, either by 3Com gaining in
> value to $170, or by Palm falling to 38.
> The most highly anticipated IPO of the year, Palm tapped the market at a
> time when growth in the Internet and wireless technologies is exploding.
> Adding to the feeding frenzy was the fact a relatively small percentage
> of shares, just 4 percent of Palm's total outstanding, were available
> for trading, while most of the rest remained in 3Coms hands. It will
> spin off the rest later.
> The confused stock market action highlighted the uncertainties
> surrounding the intertwined companies. Palm with its hot handheld
> computer system, is seen by some as peaking, and possibly facing a raft
> of new competitors in the device market and in operating systems. Parent
> 3Com, meanwhile, is spinning off one of its most valuable products,
> while its networking equipment and modems are facing strong competitive
> threats.
> Palm's stock offer has launched it onto a big stage, with a market
> valuation higher than Apple Computer Inc. (Nasdaq: AAPL), valued at $20
> billion, and about in line with Compaq Computer Corp. (NYSE: CPQ), at
> $47 billion. Its newly public status heightens scrutiny on its strategic
> moves going forward.
> "It's like the joke about the dog that chases cars and now that it's
> caught the car, what does it do?" said Michael McGuire of GartnerGroup.
> The company needs to thrust forward with a strategy of becoming a staple
> of the office environment, and getting more consumers to adopt the Palm
> handheld computer, the analyst said, although he added that he is
> skeptical the Palm will become a pervasive consumer product.
> But Ross said that the key is to create content for consumers, to boost
> its use, and to develop partnerships to boost its use in the corporate
> enterprise systems. In meeting those goals, he said, the Palm is in a
> vastly stronger position than it was a week ago, with the financial
> clout now to get more done, having raised $874 million.
> "This valuation creates excitement around the company, and they'll be
> able to attract talented people with it, and it will give them the
> currency to do acquisitions for the technology they need," said Ross.
> "But I don't think they need to feel pressure to do anything right at
> this time. They're in a strong position."

> By Kenneth A. Toudouze, CFA
> (Written before the Palm IPO!)
> Related Articles:
> As Palm (PALM, $95) gets set to release what is expected to be one of the
> hottest IPOs in history, a dark cloud looms on the horizon. That cloud is
> Symbian. For reasons that are explained below, we would recommend selling
> Palm at any price greater than $62, and buying 3Com (COMS, $81). We still
> believe that market cap matters.
> Symbian is a privately owned joint venture between some marquee names in
> wireless and is set to emerge as a leading force in wireless
> communication. At the recent CeBIT computer show in Germany, the company
> unveiled its new Quartz "communicator," a PDA with wireless Internet
> connectivity. It offers streaming multimedia on its color screen, web
> browsing, Palm-like computing, and telephony with an attachable or
> wireless headset. It allows browsing in WAP or the more desirable HTML
> protocols and supports the popular MPEG and MP3 standards. This could
> spell trouble for (PHCM) which is relying on stripped-down
> pages using WAP protocol. Quartz operates on Symbian's own operating
> environment that uses Java. In addition, it supports most of the
> leading wireless standards.
> But perhaps the most impressive feature of this product is its price.
> Beginning next Christmas, European cell phone subscribers will be able to
> upgrade this year's handset to a Quartz communicator for no additional
> cost. Although the Symbian standard should quickly gain acceptance in
> Europe, which relies mainly on the GSM (TDMA) standard, it might have a
> little more trouble in the fragmented US market. While this may be a
> challenge, it is not a problem. Whenever the company encounters an
> obstacle, it can simply turn to its list of powerful partners and
> investors.
> Partner Qualcomm (QCOM) is working to ensure the Symbian platform will be
> supported by CDMA networks, which are widely used in the US and Asia.
> Symbian is also working with Texas Instruments (TXN), and recently
> announced a joint development agreement with IBM (IBM), which involves
> IBM's messageQ middleware and small-footprint DB2 technology.
> Palm is turning to licensing its operating system in hopes of becoming the
> Microsoft of wireless Internet. But this creates two problems for Palm.
> First it allows cannibalization of it key product, as other PDA
> manufacturers create competing units using the Palm operating system.
> Second, who needs Palm's OS? Not the leading handset manufacturers --
> Nokia (NOK), Motorola (MOT), Ericsson (ERICY) and Panasonic are all
> major shareholders in Symbian.
> A new communicator called "Crystal" and a smart phone code-named "Pearl"
> are in the works, with designs due out in the second quarter. We believe
> most cell phone users will be reluctant to switch to a PDA and will
> instead opt for a smart phone, most of which will be sold by the leading
> handset manufacturers and will likely use the Symbian operating system.
> In addition to Symbian, Palm faces stiff competition from Microsoft (MSFT)
> on the OS front and from Compaq (CPQ) and Sharp in PDA manufacturing.
> Considering the hype surrounding Palm's IPO and the fact that individual
> investors will fight over the limited number of shares available (only
> about 4% of the company; an additional 3% will be sold to strategic
> partners), Palm could see a huge pop as its stock begins trading.
> However, at a price of $100, it would have a market cap of roughly $56
> billion. That would make it more valuable that Compaq.
> While most investors will not be able to buy at the IPO price, we believe
> there is still an opportunity to profit from Palm's IPO: short the stock.
> If the stock trades to the insane levels near the triple digits we would
> strongly recommend shorting Palm at any price over $62 and buying 3Com
> instead.
> Symbian, on the other hand, has serious potential. Unfortunately, the
> company is privately held. If you want to get a piece of the action, we
> would recommend buying its leading shareholders, the wireless giants.
> These companies will profit not only from Symbian's products but also
> from its technology, as the joint venture begins to shape the wireless
> world.

> Now Offers Wireless Access to Free, Unlimited Stock
> Quotes and Market Information for Palm Pilot Users With 'FRT2go'
> March 3, 2000 11:59 AM EST
> Key Wireless Strategy in Place; Stock Market Data Available Free to Palm
> VII and Palm.Net Users
> IRVINE, Calif., March 3 /PRNewswire/ --, Inc., (OTC
> Bulletin Board: FRTI), the company that brought free real-time stock
> quotes and market information to the serious online investor and
> financial services community, announced today that it has launched a
> beta version of FRT2go, the first service for use on 3Com's (Nasdaq:
> COMS) Palm Computing unit (Nasdaq: PALM) Palm VII and service
> that gives its members total wireless access to free, unlimited
> real-time stock quotes as well as other financial market information.
> "Our core services, which include free real-time stock quotes, financial
> news and analysis, company profiles, investor stock talk and other
> financial information, have made one of the most
> frequently used and "stickiest" sites on the Internet. We are now
> extending many of these premium free services to wireless users through
> the Palm VII," said Brad Gunn, founder, President and Co-CEO. "We view
> wireless access to timely market information as a necessity for serious
> investors who want to effectively manage their portfolios. As yet
> another critical extension of our investment services, the launch of
> FRT2go further solidifies our position as a leading provider of
> financial information on the Web, with over one million members today
> and a membership base that is currently growing by approximately 5,000
> new members per market day."
> Using FRT2go on the Palm VII, members not only have access to unlimited,
> free real-time market data, but they can also track the performance of
> their own personalized stock portfolio, check business news from Reuters
> and other wire services, and gain access to sophisticated financial
> technical information tailored for institutional investors, brokers and
> analysts. Unlike many other providers, does not require
> its wireless users to have an online brokerage account, nor does it
> limit its members' wireless access to a certain number of stock quotes
> per day. For more information about FRT2go, visit the company's Web site
> at
> "We are extremely excited to offer wireless capabilities for the Palm
> VII to our members, the first of a number of strategic wireless
> initiatives we are pursuing," added Gunn. "Finally, investors are no
> longer tied to their desktops -- with the help of, they
> can now cut the cord."


... a computational engine of mind boggling complexity ... -- Peyman Oreizy, 3/1/200

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