It depends on who you to talk to. Under the IPO plan, 3Com shareholders will ultimately own shares in both companies, so buying into 3Com today will get you a stake in the IPO.

3Com’s stock price has moved up a little more than $2.00 a share since the Sept. 13 announcement, to $29.38.

Most analysts agree that the current stock is undervalued. But the majority remain lukewarm on the stock's long-term prospects just the same. But analysts who like the stock are very high on its prospects.

"3Com has a lot going for it right now," says Peter Lieu, managing director of Needham & Co., based in Boston. "We rate it a ‘strong buy.'"

"3Com has strong cash flow and a strong balance sheet," Lieu adds. "It’s the exact opposite of a lot of Internet companies. It’s a stock that is very comforting for people who want to protect principal."

Last month, 3Com chairman and CEO Eric Benhamou announced plans to turn the company’s Palm Computer division into a separately traded public company. 3Com expects to complete the initial public offering of its Palm Computing subsidiary early next year. 

We're not negative on the stock," says Bert Hochfeld, technology analyst at Josephthal & Co. based in New York. "It's a good stock. We agree it's undervalued. It's just not the most exciting thing out there right now."

Hochfeld currently has a "hold" rating on the stock.

"There's no question that the Palm Pilot boosts the stock's value," Hochfeld says. "But it's still mostly a stock for value investors."

COMS 52-Week Stock Performance Chart

But Lieu says 3Com will generate about $800 million in cash over the coming year, giving the company a nice war chest it can use to extend its leadership in key markets.

Martin Pyykkonen, an analyst at CIBC World Markets Corp. in San Francisco, isn’t quite as enthusiastic. He says he sees 3Com’s top-line growth coming in at between 10 percent and 12 percent next year.

"That’s good but not real exciting," he says. Pyykkonen currently has a "hold" rating on 3Com’s stock based largely, he says, on the company’s ability to manage costs.

Lieu, however, says the stock is much more than just attractive. He says 3Com’s client-access business, which accounts for about 40 percent of 3Com’s sales, is generating gross margins of about 45 percent, more than double the margins earned by PC vendor Dell Computer Corp. {DELL}.

"It’s a mature business they are de-emphasizing," Lieu says. "But it’s still very profitable." Combine that with the more-dedicated focus 3Com will achieve by separating its networking and Palm businesses and, Lieu says, you have a recipe for success.

"You just wait," Lieu says. "Once the stock gets back up to $50 a share, everyone else will put it back on their ‘strong buy’ lists. That’s always the way it works."

And Lieu says 3Com’s Palm subsidiary has a potential market-capitalization value of about $7 billion, a figure he arrives at by multiplying Palm’s estimated 2001 revenue by seven.

"The total market value of 3Com right now is $11 billion, so an added $7 billion is significant," he says. "You add that to the company’s magnificent cash flow, and it looks very good."

Anton Wahlman, an analyst at Warburg Dillon Read, based in New York, doesn't quibble with those figures but says it would be a mistake to bet too heavily on the Palm. Wahlman says Palm sales have slowed over the last quarter. In addition, he says 3Com's client-access business, selling analog and DSL modems and other similar equipment, is being severely hurt by the trend toward low-cost PCs.

"Many of the PC makers are now going directly to Taiwan for their modems," Wahlman says. "If you're selling a $399 PC, a $5 or $10 price disadvantage can be insurmountable."

Wahlman, who has a "hold" rating on 3Com's stock, says the company's market share for next-generation digital modems will be smaller than 3Com's more-healthy slice of the older analog modem market. "They're losing ground in that business," he says. "So I think it would be smart to be a little bit careful."

While 3Com's client-access business is declining by an estimated 15 percent to 20 percent year over year in recent quarters, the company's Palm unit generated sales of $570 million in fiscal 1999, a figure that grew by more than 100 percent over fiscal 1998. There are currently more than 5 million Palm handheld computers in circulation, giving 3Com 73 percent of the overall U.S. market for personal digital assistants, according to International Data Corp.

3Com recently rolled out the new Palm VII, a handheld device priced below $500. Unlike earlier Palm products, the Palm VII lets customers retrieve and send personal and corporate e-mail. Previously, Palm owners had to open a Palm.net account to access e-mail features. Customers can also use the new Palm to bid on auctions at eBay.com, trade stocks through Fidelity Investments, and buy CDs and books from Amazon.com, among other things. The device comes equipped with a wireless modem that connects through the BellSouth cellular network.

3Com’s Palm unit, however, is facing a challenge from Palo Alto, Calif.-based Handspring Inc., which last month debuted its $149 Visor PDA. Several other low-cost PDAs, running Microsoft’s Windows CE software, are also expected to hit store shelves in the coming months.

"Palm is the leading growth driver for the company," Pyykkonen says. "But their decision to not be compatible with Windows CE is something they’re going to have to wrestle with in the future."

Lieu brushes off such concerns. He says 3Com’s Palm has a commanding lead that will be difficult for competitors to overcome.

"It’s going to be a long time before any of them get anywhere close to 3Com’s market share," Lieu says. He adds that newcomers to the market are going to have to do a lot of software debugging before they can offer a range of services that compete with 3Com’s current suite of Palm Pilot applications.