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Palm stock rockets to create $53.4bn company

Share price peaks at over four times initial value in first day's trading

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Trading in Palm's freshly-IPO'd shares added over 300 per cent to the stock's launch price yesterday, taking them from $38 apiece to a high of $165 before closing at $95.06. The final price of the day left Palm, Inc. valued at $53.4 billion on paper, way above that of the company it emerged from, 3Com. Palm's former parent saw its shares fall over $22 to $83.81 after a period of strong growth in the run-up to the Palm IPO. 3Com has said that it plans to offer the bulk of its 93.8 per cent stake in Palm to its shareholders within the next six months. The drop suggests, perhaps, that buyers with a long-term view - and in these day-trading times, six months is the long term - have got their stakes in 3Com set up and ready for the windfall. That said, given the way Palm's stock has rocketed in value, others may now be persuaded to take the 3Com route to, so trading in 3Com stock is likely to become more active. As is typical with hi-tech stocks, Palm's valuation far outweighs its profit expectations. In the six months to 26 November it made itself $12.9 million, and there's no way that's going to give shareholders a decent dividend - it represents earnings of around two cents a share ($12.9 million spread among a total of 575 million shares). Not, of course, that most of these folks are in it for the dividend - it's the get-rich-quick buy cheap, sell high deal that attracts most hi-tech stock buyers these days. However, Palm's outlook is bright, and it's profitability and sales growth is likely to continue for some time. The company's strategy of building its licensing business ensures - it wants 25 per cent of sales to come from licensing within the next three to five years - allows the Palm brand to spread into new markets without Palm itself having to take any of the risk. And risk there is. Microsoft continues to promote Windows CE, which shouldn't be overlooked, despite the PalmOS' overwhelming marketshare. And Symbian's Quartz platform is a powerful opponent to attempts to push PalmOS into that grey area where wireless data, the Net and telecoms all come together. That said, Palm's level of brand awareness far outweighs its rivals' and even the most conservative predictions for the scale of the emerging wireless data market suggests there's plenty of room for Palm to win for itself some very nice sales growth indeed, even if it's marketshare never reaches the 70-per cent it has in the organiser/PDA business. ® Related Story Palm stock goes on sale, nets $1.09bn Smart card company sues over Palm patent piracy claim Inside Quartz: Symbian's new Palm-killer platform

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