Palm `Synchs' Plans With Wireless, Internet Firms

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As 3Com prepares to spin off its Palm Computing subsidiary, the company recently revealed that Motorola, Nokia and America Online (AOL) will be key investors in the subsidiary's initial public offering.

3Com said it plans to spin off the company, to be named Palm Inc., in February 2000 and plans to make at least $100 million on the offering, according to a filing this week with the Securities and Exchange Commission (SEC).

3Com also disclosed that AOL, Motorola and Nokia will each take a stake of as much as 1.5 percent of Palm's total capital stock. Twenty percent of the stock will be offered to the public and the remainder will be distributed among 3Com shareholders, 3Com said.

The interest in Palm by Nokia, Motorola and AOL is seen as posturing for the impending amalgamation of the mobile phone and organizer markets, according to mobile analyst Brian Phillips of ARS in La Jolla, Calif.

"As the lines between cell phones and handhelds start to blur they are going to need some type of operating system running them. The cell-phone makers are getting those deals in place right now," Phillips said. "Even though convergence will take place slowly over the next few years, they need to make those plans now. Ericsson is teaming up with Microsoft, and Nokia and Motorola are choosing Palm, and Qualcomm is a little up in the air."

Phillips noted though that Nokia, Ericsson and Motorola also have agreements with Symbian to use the EPOC operating system, so it appears the companies are hedging their bets and aligning themselves with several prospective operating systems for the future.

EPOC is a 32-bit OS designed specifically for wireless communications. Palm Computing is currently the leading platform in the handheld market.

For AOL's part, the company is reportedly seeking to develop Internet services for new portable gadgets.

Also, as part of Palm's recent SEC filings, 3Com revealed Palm Computing had a net income of $9.7 million for the three months ended Aug. 27, compared with $8.1 million in the same period a year earlier. Revenue jumped 52 percent to $177 million from $116 million a year earlier. Palm said its profit margin declined because of additional expenses associated with the launch of the Palm VII wireless Internet service. 3Com is scheduled to report second-quarter financial results next week.

For company links see.
3Com
Palm
Motorola
Nokia
America Online
Symbian

For previous TWICE coverage on this topic see.
Yankowski To Head Palm Computing, 03-Dec-1999
Palm And Nokia Team Up To Develop Hybrid Products, 13-Oct-1999
3Com To Spin Off Palm Division, 13-Sep-1999
PC, E-Mail Apps Complicate Wireless Buyers' Lives, 12-Jul-1999
AOL Email Comes To The Palm, 23-Jun-1999
Palm VII Hits Shelves In NYC Stores, 26-May-1999

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