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3Com Files to Spin Palm Division Off in IPO

Posted by Hemos on from the ongoing-story dept.

It's been an ongoing story about 3Com and its PalmPilot division. The question, of course, has been what to do with it. Just a few months ago, we covered their original plan for spinning off the division, but now it looks like they are actually putting the plan in motion and we should see an IPO in about six months.

4 of 88 comments (clear)

  1. $100 million? by DanaL · · Score: 4

    That kind of reminded me of Dr. Evil saying he was ransoming the world for, "One MILLION dollars!"

    Are they just being humble? Unless the stock market comes to its senses in the next few months, I rather suspect they'll get a little more than $100 million (given absurdly high IPOs we've been seeing)!

    Dana

  2. Wait a sec... by ewhac · · Score: 3

    So let me get this straight:

    • The PalmPilot is initially developed by a small independent company;
    • Small independent company gets acquired by US Robotics;
    • US Robotics gets acquired by Candlesti... er, 3Com;
    • During all this, Palm products become tremendously popular and earn lots of money for 3Com;
    • 3Com spins off Palm independently again, except this time there's an IPO involved.

    IPOs are typically used to obtain working capital for business development. But the Palm series is already popular and profitable.

    Does this sound screwy to anyone besides me?

    Schwab

    --
    Editor, A1-AAA AmeriCaptions
  3. Exciting time for the industry by MattMann · · Score: 3
    It's an interesting question as to whether PalmPilot makes sense as a standalone company. Does that maximize the value of the technology to its owners?

    Clearly, it's the leading player in the handheld category of devices, and clearly handhelds are where a lot of action will be for the next few years. But equally, handhelds need to be wired, tethered, and tied to existing platforms for awhile to take advantage of the vast networks of data which already exist.

    By being independent, PalmPilot would be free to make alliances all over the place. A company like Compaq, for instance, might not "deal" with IBM as readily as they would with an independent. However, an independent will have problems growing quickly enough to cover all of the opportunities. Here lies the strength of a company like IBM having a division like PalmPilot. Think what the Apple Macintosh might have done had it been an IBM product in the early 80's!

    There may not actually be a way for one player to capture the lion's share of the economic value of this market. Go it alone and you risk being the VCR Beta or the Mac, while turning it into the industry standard like VHS means you are just one of many players. Of course, the Microsoft story shows that it can be done, but I'd think that would be hard to pull off in this market. Back when MS was creating its monopoly, reverse engineering and cloning the PC seemed daunting, but not today. Plus, competitors are much more wary given what Microsoft did. Opensourcing it would be VERY cool... for the customers. Hard to recommend it to 3Com with a totally straight face as it would open them up to shareholder lawsuits.

    Anyway, it doesn't make sense as a division of 3Com, no synergies at all with the sales force, channels, customers, etc. So, how should they dispose of it? They undoubtedly have had an eye on some of the wild IPOs lately and figure that's the best way to get the most money out of it now (watch: they'll tout it as a linux pure-play! :) which might make a pile of dough for them but won't necessarily yield the most successful outcome for the platform.

    Very exciting time for the industry, though.

  4. Re:How popular are they? by Bearpaw · · Score: 3
    The way I understand it, while Palm was a nice moneymaker, it didn't fit really well with the rest of 3Com's business. And the Palm folks evidently felt constrained by having to deal with a parent company, and wanted to be more independent, to be better able to respond to competition in the handheld market.

    It's also my understanding that there was (is?) a large brain-drain going on, as Palm lost a lot of its really good people to Handspring. (Ironic, given that Hawkins and Dubinsky left Palm in '98 to form Handspring after 3Com refused to let them spin off Palm.) Palm may be hoping that the results of an IPO will enable them to afford to keep (and hire) good employees.