Saturday, July 13, 2013
the last book I ever read (dot.con: How America Lost Its Mind and Money in the Internet Era, excerpt twelve)
from John Cassidy's dot.con: How America Lost Its Mind and Money in the Internet Era:
In the stock market, the rush to embrace technology continued. In the first three days of March, the Nasdaq gained another two hundred points. On March 2, 3Com, a Silicon Valley telecommunications equipment manufacturer, issued shares in its Palm Computing subsidiary. The underwriters originally estimated the issue price at $12 to $14, but demand was so strong that on the eve of the offering they raised the price to $38. When trading started, the stock surged almost $60, closing at 95 1/16. At that price, Palm’s $54.3 billion stock market valuation dwarfed the $28 billion valuation of its parent company, 3Com. To a connoisseur of Wall Street mathematics, there was a certain beauty in these numbers. Since 3Com still owned the 95 percent of Palm’s stock that hadn’t been issued, the market was placing an implicit value on the rest of the company of about negative $22 billion.