PalmPilot Maker 3Com To Separate Networking, Handheld Groups

3Com Corp. plans to spin off its Palm Computing unit, maker of the popular PalmPilot handheld computer. The company says Palm Computing will become an independent publicly-traded entity through an initial public offering, which it plans to hold early next year. 3Com will then spin off the balance of the Palm Computing stock to its shareholders. The company says the new structure will enable 3Com and Palm to build networking and handheld computing, respectively, by allowing each company to independently focus on growth opportunities in the most promising markets. "Creating the industry's first independent, publicly traded handheld computing company is a significant milestone, reflecting both the current success and the future potential of our Palm business," says 3Com CEO Eric Benhamou. "Further, the formation of two distinct companies, each with greater flexibility, agility, and focus, is expected to create more value for our shareholders, customers, and employees." With fiscal 1999 sales of $570 million, the Palm business represented about 10% of 3Com's total fiscal 1999 sales. Revenues have more than doubled annually, and the business has been expanded to include new markets for software licensing and Internet services.