Analyst David Toung of Argus Research lowered his rating on 3Com to a ''sell'' from a ''buy'' this afternoon and said the remainder of the Santa Clara, Calif.-based company's business isn't growing as fast as Palm. Efron said his fund, which bought 15,000 Palm shares, sold its 350,000 3Com shares in September after holding the stock for three years. Palm has sold more than 5.5 million Palm organizers since they were introduced four years ago. The devices let consumers use a stylus to enter addresses and appointments on a liquid-crystal screen. The organizers have gained a loyal following among executives and technophiles, who tote the units in leather cases and swap programs and information via infrared beams.
All units connect to a PC to exchange information and programs.
Developers have created several thousand software programs to run on the Palm devices, Palm said. Palm faces competition from new cell phones offering Internet access as well as organizer functions. Handspring was founded in 1998 by Jeff Hawkins, who founded Palm and invented the first PalmPilot, and former Palm President Donna Dubinsky. Psion employs a 32-bit operating system, while the Palm system is 16 bit. Palm sold 5.9 million shares directly to America Online Inc., the world's largest online service, and Nokia and Motorola, the top two cell-phone makers.