Palm Stock Falls with the Tech-Heavy NASDAQ

Posted By: Ed Friday, April 14, 2000 4:34:24 PM

Palm's stock closed Friday at just over $31.50, down about 8% on the day, after starting the week at over $40. The stock is now below its IPO price. Palm's stock is listed on the NASDAQ, which lost about 10% of its value Friday as investors dumped technology stocks.

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hambugman @ 4/16/2000 9:26:16 AM #
I thought I was buying in at a good price at $64.75, as you can see I have lost over half. Oh well, the Lord givith, and the Lord taketh away. Maybe now is the time to buy more, unless of couse it goes down to $15.00 per share.

And Coms is now trading at -7.82 and your point is???

I.M. Anonymous @ 4/16/2000 11:09:17 AM #
And Coms is now trading at 40.06 . If you factor in the fact that COMS owns 92% of PALM, and that for every 100 shares of COMS at the time of distribution you will be given 152 shares of PALM (and still keep your 100 shares of COMS don't forget!) Lets do the math here 31.5 x 1.52=47.88 (the value of 1 coms share in palm shares)now lets subtract the price that coms is currently trading at 47.88-40.06= 7.82 meaning Coms is currently trading 7.82 below its holdings in Palm. Or to put it another way -7.82. Now after the distribution I know the value of Coms will go down but I doubt very highly it will fall below zero.
So who is buying Palm shares right now? The same people who have bought them all along. Real investors really should be capable of doing simple math.

um, ok im stupid but...

I.M. Anonymous @ 4/16/2000 11:50:06 PM #
does that mean to buy palm now??? I would think it can only go up from here, it is everyone tec-heads tool, no?
RE: um, ok im stupid but...
Ed @ 4/17/2000 2:08:02 PM #
I'm not a stock analyst but I'm playing one in this e-mail. If you are buying for the long haul, I think this is an excellent time to pick up some Palm stock on the cheap. The company is sound and it makes an excellent product. The stock will be worth over $80 in another year or two.

But don't buy it if you want to cash out in a couple of months. The Markets are a little nervous right now and Palm is going to lose money or just break even for a while. Here's a quote from their most recent SEC filing:

"We also expect to incur some duplication of costs over the next 12-18 months, as we build the infrastructure for a stand-alone public company, while also paying 3Com to perform these services under transition service agreements. In addition, for at least the next several quarters, we expect to incur costs related to our separation from 3Com. We anticipate that our operating margins may be lower over the next 12-18 months as compared to recent quarters, and there may be several quarters in which we report operating losses as we invest to expand our business, take advantage of market opportunities and execute our strategic plan as an independent stand-alone company."

Palm Stock Continues Dropping

Ed @ 4/17/2000 2:03:31 PM #
At 2 pm EST Palm was at 28 5/8, a drop of another 3 points or about 10% of it's value. If it keeps this up pretty soon it will be down at the price where Palm had originally intended to IPO it.

Ok ok I see I have to explain coms shares v. palm better...

I.M. Anonymous @ 4/17/2000 11:08:30 PM #
Ok, lets put it a simpler way.
Scenario 1: You buy 100 shares of 3Com at todays price of 39 1/16. Total price 3906.25. When 3Com does their distribution in a couple months they will GIVE you 152 shares of Palm just for owning 100 shares of 3Com. Assuming the same price today of 28 5/16 (for Palm)that means you will have been given 4303.50 worth of Palm shares- Plus you will still own 100 shares of 3Com- who's value will certainly be less without Palm but definately worth more than zero.
Scenario 2: Alternately you could use 3907.13 to buy 138 shares of Palm right now and in a couple months after the distribution you will still own 138 shares of Palm- No more, no less.
Now as an investor, for your 3900.00 and change which would you rather own? 152 shares of Palm plus 100 shares 3Com? Or would you rather own just 138 shares of Palm? Both options cost exactly the same. The only differnece is the the first option you have to hold on to your 3Com shares and wait a few months for.
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