Frenetic trading expected for Palm IPO

Shares in Palm, the 3Com unit that develops the PalmPilot personal digital assistant, will begin trading on the Nasdaq today amid an expected frenzy of activity.

On Tuesday investors clamoured to buy shares in 3Com because they were afraid that they would not get a look in on Palm's initial public offering (IPO). 3Com's share price rose 24 per cent to close at 98 cents the day after its Palm unit doubled the amount it expects to raise from its stock sale today to $736m (£463m).

Palm expects to sell 23 million shares, or roughly four per cent of the company, at between $30 and $32 a share. This is almost double the original $14 to $16 asking price. The new price will put its market capitalisation at about $18bn, almost as much as Apple.

3Com also plans to spin off some 95 per cent of its shares in Palm to its shareholders in six months. But despite doubling the original offering price, analysts said it could climb even higher.

"You may see another price range increase. I have a feeling that maybe they may raise it again to around $36 or $40," said Jeff Hirschkorn, a senior analyst at IPO.com.

More than five-and-a-half million PalmPilots have been sold worldwide since they were first introduced four years ago.

Separately, Palm announced that it will use Sun Microsystem's iPlanet services and Star Office portal to give Palm VII customers wireless access to corporate applications.

"Palm's move into wireless is an extremely astute move," said Irv DeGraw, research director at WorldFinanceNet.com, which provides news and investment advice for online investors. "It has the lead and it's not looking back."