On March 2nd, 2000 – less than a week before the Nasdaq Composite index hit its all-time peak – network equipment maker 3Com spun off its Palm mobile-devices division in a blaze of tech-bubble-fuelled glory. The IPO was originally priced at $14-16 per share, then revised sharply higher to $32-36, then finally priced at $38 – and when it hit the boards, the tech stock frenzy kicked in. Palm stock began its first day of trading at $145.
They had cool gadgets – everyone in the world wanted the awesome new Palm Vx (with eight megabytes of RAM!), and they were introducing new features all the time – colour screens! Wireless internet access! And they made plenty of money licensing the Palm OS to Handspring. It had to be a sure thing, right?
Have a look at Palm’s stock chart since then. It’s split-adjusted – between a humiliating 1:20 reverse split in 2002 to keep the company above the $1 share price mark and stave off delisting from Nasdaq, and a less humiliating 2:1 regular split in 2006, the net effect’s been a 1:10 reverse split over the life of the company – and on that basis, the decline looks even worse (click to embiggen):
Palm listed at a split-adjusted $1,450. Ten years later, HP has announced that they’ll put Palm out of its misery for $5.70 per share.
And some people still think HP overpaid. The pull quote:
My prediction is that Palm will end its life as a write-off in HP’s balance sheet.