3Com Corp.(Nasdaq: COMS) took the high road, while spin-off Palm (Nasdaq: PALM) took the low road Tuesday after 3Com announced it would repurchase up to $1 billion worth of stock, and complete its spin-off of the company earlier than expected.
Shares in 3Com, a computer networking company, were up 4 1/16 to 47 3/4, or 9 percent.
Palm, which was spun-off in an initial public offering of stock in March this year, was down 3 11/16 to 28 13/16, or 11 percent. Shares have had a steep descent from their high of 165, despite an analyst, who recently upped her rating on the stock.
3Com plans to repurchase company common 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 repurchased since June 1998 to 35.3 million, for a sum of $919.3 million.
3Com Corp also said Monday said it will distribute all its shares in Palm as a tax-free stock dividend on July 27 to shareholders of record on July 11.
3Com currently owns 532 million shares, or about 94.3 percent, of Palm's outstanding common stock.
The number of Palm shares each 3Com shareholder will receive will be based on the number of outstanding 3Com shares on July 11. Based on roughly 351 million 3Com shares outstanding as of April 24, the distribution ratio would be about 1.5 shares of Palm for every share of 3Com.
In a statement, the company also said its balance sheet includes over $3 billion in cash and short-term investments.