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Palm Shares Skyrocket on First Day of Trading
By Cliff Edwards   Associated Press
SANTA CLARA, Calif. — Shares of Palm Inc. nearly quadrupled in opening trading today on the Nasdaq Stock Market as investors flocked to the new public company for the popular handheld electronic organizer line.

Palm, formerly a subsidiary of 3Com Corp., said Wednesday it sold 23 million shares, or a 4.1 percent stake in the company, at $38 apiece, raising $874 million. The per-share offer price came in $6 above the high end of the previously announced $30-$32 range and more than double the original pricing of $14-$16 a share.

Shares opened at $145 on the Nasdaq, but were trading slightly lower at $134 in late morning trading.

The explosive growth of the Internet, and the drive to bring the Web to people wherever they go, has made the Palm family of handheld products the darling of the corporate set and is increasingly catching the eyes of average consumers.

Palm has fended off competitors in the past four years and stayed dominant by creating portable devices that are easy to use and perform a few simple functions well, including scheduling, keeping phone numbers and recognizing handwriting.

Palm today can lay claim to a dominant 75 percent of the market for handheld units. And devices running on the Palm operating system made up 91.1 percent of the handhelds sold in U.S. stores in the fourth quarter of 1999, according to PC Data, a Reston, Va.-based market research firm.

Even more important, Palm - unlike many other companies with recent IPOs - is making money, with $23 million in profits on $435 million in sales in the six months ended Nov. 26.

Investors already have caused shares of 3Com, the No. 2 maker of computer networking equipment behind Cisco Systems, to more than double in the past month. The company, which will initially retain ownership of 94.8 percent of Palm, plans to spin it off to shareholders later this year.

3Com also sold another 5.9 million Palm shares directly to corporate partners America Online Inc., Nokia and Motorola Inc., raising an additional $225 million.

The Palm IPO is intended to help fund its new strategy of licensing out its operating system and letting other manufacturers build the devices. Within two years, analysts project the company's revenue from selling the Palm gadgets to be surpassed by revenue from licensing fees from the operating system.

Both 3Com and Palm are based in Santa Clara.

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