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Palm distribution date set
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May 8, 2000: 8:13 p.m. ET
Parent 3Com will transfer its 94 percent stake to shareholders in July
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NEW YORK (CNNfn) - Computer networking company 3Com on Monday said its board of directors has set the date for the distribution of all the company's shares of handheld computer maker Palm to 3Com shareholders.
3Com (COMS: Research, Estimates) spun off Palm in early March, retaining roughly 532 million shares, or 94 percent, of the company's common stock.
Those shares will be distributed on July 27 to 3Com shareholders of record on July 11, the company said.
That's two months sooner than executives at Palm (PALM: Research, Estimates) said they expected the shares to be distributed when they reported fiscal third-quarter earnings in late March.
3Com also said it had received confirmation from the Internal Revenue Service that the Palm distribution will be tax-free to shareholders for U.S. federal income tax purposes.
The number of Palm shares each 3Com shareholder will receive will be based on the actual number of shares of 3Com common stock outstanding on the record date. Based on the roughly 351 million shares of 3Com common stock outstanding as of April 24, 2000, the distribution ratio would be about 1.5 shares of Palm for every share of 3Com, the company said.
Palm shares ended Monday's session 1-1/16 higher at 32-1/4, a 3.4 percent gain. Since they made their debut on Nasdaq in March, Palm shares have fallen sharply, slipping more than 66 percent from their first-day close of 95-1/16.
3Com finished Monday's session up 9/16, or 1.3 percent, at 43-11/16.
3Com also said Monday that its board has authorized the company to repurchase up to $1 billion worth of 3Com stock via agreements with broker dealers or on the open market.
The new plan replaces previous authorizations totaling 45 million shares from June 1998 to September 1999. During fiscal 2000, 3Com repurchased 20.5 million shares, bringing the total number of shares repurchased since June 1998 to 35.3 million for a total outlay of $919.3 million, the company said.
"We believe this expanded stock repurchase program is an important component in our multiple efforts to increase shareholder value," Eric Benhamou, 3Com's chairman and chief executive said in a statement. "Our strong balance sheet which includes over $3 billion in cash and short-term investments is the foundation for this repurchase program, as well as for strategic investments and acquisitions." 
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