Palm priced at $38 per share

March 1, 2000: 8:03 p.m. ET

Hotly-anticipated offering expected to begin Nasdaq trade on Thursday

NEW YORK (CNNfn) - Palm Inc., 3Com Corp.'s handheld computer spin-off, on Wednesday set an initial public offering price of $38 per share, well above its recently-raised price range.
    The company, which makes the popular "Palm Pilot" handheld computing devices, plans to float 23 million shares on Nasdaq under the ticker symbol PALM/. That would raise about $874 million before investment banking fees. Shares are expected to begin trading Thursday.
    Earlier this week, Palm doubled the projected price range for its IPO to $30-to-$32 per share, from $14-to-$16 per share, amid growing investor enthusiasm for the deal.
    After the offering is complete, Palm will have 562.2 million shares outstanding, of which it will hold 532 million, or roughly 95 percent. The company plans to distribute the stock to 3Com (COMS: Research, Estimates) shareholders within six months of the offering.

Click here for an after-hours quote

Shares of 3Com, which have spiked sharply in recent week ahead of the offering, continued to rise in after-hours trade Wednesday, adding another 2-3/8, or 2.3 percent, to 107-1/2.

Getting in at the offering price are: America Online (AOL: Research, Estimates) with roughly 2.6 million shares; Nokia (NOK: Research, Estimates), which also will buy roughly 2.6 million shares; and Motorola (MOT: Research, Estimates), which will buy about 2 million shares.
    Goldman Sachs and Morgan Stanley Dean Witter managed the underwriting of the offering, with Merrill Lynch and Robertson Stephens serving as co-managers.
    Palm said it would use the net proceeds of the offering to pay a dividend as well as other expenses to 3Com, to increase its capital spending and marketing efforts, and to make investments and acquisitions.
    The underwriters have the option of purchasing an additional 3.45 million shares in the event of strong demand.