3Com Addresses Investor Questions Regarding Palm Distribution.

Business Editors/High-Tech Writers

SANTA CLARA, Calif.--(BUSINESS WIRE)--July 25, 2000

3Com Corporation (Nasdaq:COMS) today addressed investor questions regarding the Palm distribution. All 3Com shareholders who own 3Com common stock, under the symbol (COMS) by close of market at 4:00 p.m. Eastern Time on July 27, will receive approximately 1.48 shares of Palm for every share of 3Com.

PALM DISTRIBUTION FREQUENTLY ASKED QUESTIONS (FAQ)

Q1) When will I need to own 3Com shares in order to receive Palm shares?

A1) You must be an owner of record of 3Com shares by close of market at 4:00 p.m. Eastern Daylight Time on the distribution date, July 27, 2000, in order to receive Palm shares. This means you can execute a trade to buy 3Com (COMS) up until 4:00 p.m. Eastern on July 27 and still be entitled to the Palm shares. Shareholders should be aware that if they sell 3Com shares between the record date and the distribution date, they may be selling their right to Palm shares in the distribution. To learn more about buying or selling 3Com shares between the record and distribution date, please see question 14 below.

Q2) How many shares of Palm will I receive in the distribution?

A2) The final ratio of Palm shares for each 3Com share is approximately 1.48. The exact number of Palm shares that a 3Com shareholder of record will receive is calculated based on the number of 3Com shares outstanding on the record date, July 11, 2000, relative to the approximately 532 million Palm shares to be distributed (distribution ratio). To calculate the exact number of Palm shares to be distributed to each 3Com share, we will divide the approximately 532 million Palm shares owned by 3Com by the approximately 358.5 million 3Com shares outstanding as of 5:00pm on the record date, July 11, 2000.

Total number of Palm shares to be distributed = 532.0 million = 1.48 Total 3Com shares outstanding as of July 11th 358.5 million

Based on the above calculation, the final distribution ration is approximately 1.48. This means that shareholders will receive approximately 1.48 shares of Palm for every outstanding share of 3Com that is owned as of the distribution, which will take place at 5:00pm EDT on July 27, 2000.

Q3) What is the "record date" and why was it important?

A3) The record date for the Palm distribution was July 11, 2000 at 5:00pm EDT. The record date was the date at which the number of 3Com shares outstanding was frozen in order to fix the distribution ratio. Any 3Com shares outstanding as of the record date are eligible to receive the Palm distribution. Because these outstanding shares have the Palm dividend attached, the shares may be bought and sold on the open market up to the distribution date, which is July 27, 2000. All shareholders who purchase 3Com shares as of 4:00 p.m. Eastern Time on July 27, 2000, will receive the Palm dividend.

Q4) What and when is the distribution date? When will I actually receive my Palm shares?

A4) The 'distribution date' is the date when a dividend of Palm shares is distributed to 3Com shareholders. This date is set for July 27, 2000 at 5 p.m. Eastern Time.

If you hold your 3Com shares through a stockbroker, bank or other nominee, that firm will credit your Palm shares to your account. You should allow several days following July 27, 2000 for this to occur.

If you hold your 3Com shares in certificate form, 3Com's transfer agent, EquiServe, will mail the Palm certificate shares to you on or about August 14, 2000.

Q5) Will the current trading price of either 3Com or Palm affect the number of shares I receive .

A5) No, the current trading prices of the stocks will not affect the number of shares you receive or the distribution ratio.

Q6) Will the number of 3Com shares I own increase or decrease after the distribution?

A6) The distribution will not change the number of 3Com shares you own. You will receive only Palm shares in the distribution. If you have a 3Com certificate, you will not need to send in your certificate. Please watch your mail for an Information Statement that was mailed out on July 24. Additionally, this Information Statement is available at our website at www.3COM.com/investor.

If you are an employee of 3Com Corporation or Palm and own shares through 3Com's benefit plans, please visit the 3Commmunity Web site or the Inside Palm Employee interim Web site.

Q7) What will happen to the price of 3Com after the distribution? Will the price go down?

A7) Yes, the market price of 3Com (COMS) will decrease immediately after the Palm distribution because the value of the Palm shares that was inherent in COMS will have been extracted and issued to shareholders in form of PALM shares. Immediately following distribution, 3Com shareholders will hold the same overall value that was held immediately prior to the distribution, however, that overall value will be associated with two separate stocks, COMS and PALM, as opposed to the one stock, COMS, prior to the distribution.

Beyond the fact that 3Com shares will adjust to reflect the distribution of the value of the Palm shares out of 3Com, we cannot predict what the market prices of 3Com or Palm will be at any time before or after the distribution. Factors such as market conditions, industry dynamics and the economy will all factor into determining the market price of any stock, including 3Com and Palm.

Q8) How do I calculate the cost basis for tax purposes of the Palm shares I will receive following the distribution?

A8) On July 24, an Information Statement was mailed to each 3Com shareholder of record. Included in this packet will be information to assist you in determining the cost basis of your shares. The Information Statement is also available on 3Com's Web site at: www.3com.com/investor.

Q9) Where can I get more information about Palm?

A9) Information about Palm, Inc. is available on Palm's Web site at www.Palm.com, or you can call 1-877-OWN-PALM. In addition, information about Palm will be included in the Information Packet that was mailed to shareholders on approximately July 24, 2000.

Q10) Who should I call with questions about my stock account or my share certificates?

A10) If you hold your 3Com shares in a brokerage or bank account, please contact your representative at that bank or brokerage firm. If you hold share certificates issued by 3Com Corporation in your name, please call EquiServe at 1-781-575-3120

Q11) Is the distribution tax-free?

A11) The U.S. Internal Revenue Services has ruled in a private letter that the distribution of Palm will be free of U.S. federal income taxes. This means that for U.S. federal income tax purposes, 3Com shareholders will not recognize a gain or loss when they receive Palm shares. However, depending upon your cost basis, a gain or loss for tax purposes may be recognized upon sale of your Palm shares. Any cash received in lieu of fractional shares will be taxable upon receipt for U.S. federal income tax purposes.

International shareholders should consult with a personal tax advisor to determine the taxable effect of this distribution. Most jurisdictions outside the United States will tax the distribution.

Q12) Will I receive the Palm stock dividend for all 3Com shares that I own?

A12) If you purchase 3Com stock in the "Regular Way" market and the purchase settles prior to the Distribution date, which is July 27, 2000, you will be eligible to receive a Palm dividend. This means that you must have purchased shares of 3Com Corporation (COMS) in either a certificate form, as an account with EquiServe (our transfer agent) or in your brokerage or bank account. If you own shares through 3Com's employee benefit plans, please visit the 3Community employee Web site or the Palm Employee Web site. Please be advised that cash will be issued in lieu of fractional PALM shares. This check in lieu of fractional shares will be mailed to you by Equiserve approximately one week following the distribution.

Q13) If I hold a mutual fund that owns 3Com Corporation shares, will I receive Palm shares?

A13) If you hold a mutual fund that owns 3Com Corporation, you need to check with your mutual fund advisor to see if you will be receiving a distribution of Palm shares.

If you own shares through 3Com's employee benefit plans, please visit the 3Community Web site or the Palm Web site. Restricted shares held under one of 3Com's incentive stock plans will receive a restricted dividend of Palm shares.

Q14) Why are there different stock symbols for 3Com?

A14) The difference in the stock symbols is due to the creation of two markets in 3Com stock: a "regular way" and an "ex-distribution" market. Between July 7 and July 27, the regular way market will trade 3Com stock under the ticker symbol COMS. Shares traded under this ticker symbol will include an entitlement to receive the dividend of Palm shares. The ex-distribution market will trade 3Com stock under the ticker symbol COMS V and will not include an entitlement to receive shares of Palm. Since the COMS shares effectively include the Palm shares, the price of COMS will be higher than the price of the COMS V shares.

People who own shares of 3Com common stock at the distribution date under the ticker COMS will receive Palm shares shortly after the distribution. People who sell shares of 3Com common stock under the ticker COMS prior to the distribution date will also sell their entitlement to receive shares of Palm.

The ex-distribution market will end at market close on July 27, 2000. At that time, the COMS V ticker and market for this stock will disappear and effectively become COMS. Thereafter, 3Com will only be traded under the ticker symbol COMS, without the entitlement to receive Palm shares.

Q15) Why are there different stock symbols for Palm?

A15) The difference in the stock symbols is due to the creation of two markets in Palm stock: a "regular way" and a "when-issued" market. Between July 11 and July 27, the regular way market will trade Palm stock that is not currently held by 3Com under the ticker symbol PALM. The when-issued market will trade Palm stock that a 3Com shareholder of record is due to receive on the distribution date under the ticker symbol, PALM V. Investors that purchase PALM V shares will not receive shares until after the distribution occurs in July.

There should not be any material difference between PALM and PALM V stock prices.

The when-issued market will end at market close on July 27, 2000. At that time, the PALM V ticker and market for this stock will disappear and effectively become PALM. Thereafter, Palm will only be traded under the ticker symbol PALM.

Q16) Why is the COMS V price different from the COMS price?

A16) The difference is because COMS traded prior to the distribution date will include the attached value for Palm shares. The COMS V stock represents the market value of 3Com without the value of the Palm shares, so its price is lower. If you sell stock in COMS prior to the distribution date, you will sell your right to receive Palm shares in the distribution. Shareholders must own COMS as of the close of market on July 27, 2000 to receive the Palm shares.

After the July 27, 2000 distribution date, COMS will only trade under one symbol, COMS, which will not include the value of Palm shares.

For additional information on the Palm distribution, please visit 3Com's investor relations' Web site, at www.3com.com/investor, or call our toll-free investor information line at 1-877-463-6326 (U.S. only) or 703-386-9710 (internationally). Investor information on Palm, Inc. can be obtained at www.palm.com, or by calling 1-877-OWN-PALM (U.S. only). For questions regarding shareholder certificates or address changes, please contact EquiServe investor relations department: 781-575-3120.

About 3Com Corporation

3Com simplifies how people connect to information and services through easy-to-use, connectivity products and solutions for consumers and commercial organizations. The company also provides access infrastructures and IP services platforms for network service providers. For further information, visit www.3com.com or the press site at www.3com.com/pressbox.

About Palm, Inc.

Palm, Inc. is the leading provider of handheld computers (IDC, Dec 1999), including the Palm III, Palm V and Palm VII series of handheld computers. The Palm OS platform is the foundation for the industry-leading handheld computers from the company as well as products from its strategic partners such as IBM, QUALCOMM, Franklin Covey, Handspring, TRG and Symbol Technologies. Platform licensees also include Sony and Nokia. Designed to support the increasingly mobile and geographically dispersed nature of information management, the company's handheld solutions allow people to carry their most critical information in their pockets.