3Com Rises 6.9% on Expected Increase in Modem Sales
Santa Clara, California, March 4 (Bloomberg) -- 3Com Corp. shares
rose 6.9 percent amid optimism that sales of its computer- networking
products and telephone-based modems will increase this year.
3Com rose 2 7/16 to 37 11/16 in trading of 15.4 million,
making it the fourth-most active issue in U.S. markets.
The maker of equipment that links personal computers to networks is
the market leader for so-called 56K modems, which let computer users
access the Internet 60 percent faster than existing phone-based modems.
An international board last month set a standard for 56K, a move that's
expected to spur sales of the products.
''The modem standard should accelerate their sales growth,'' said
Eric Blachno, an analyst at Bear, Stearns & Co. who has a ''buy'' rating
on 3Com. Blachno expects the company to report quarterly revenue of
$1.35 billion to $1.4 billion.
Before the standard, 3Com's 56K modems couldn't communicate at the
highest speeds with modems using a rival technology made by Rockwell
International Corp. That caused many consumers and corporate buyers
to put off modem purchases.
Asia
On a conference call in December, 3Com officials blamed slowing
modem sales and economic turmoil in Asia for its lower profit in the
quarter ended in November, which fell 91 percent from a year earlier.
The company, which gets about 10 percent of its revenue from Asia,
won't see its Asian business rebound for at least the first half, Blachno
said.
3Com's dominant position in sales of low-cost network interface cards,
or NICs, should allow it to maintain its profit margins for those products.
If the company can move those products through their distributors, they
should add to sales growth, he said. 3Com gets half its revenue from
its modems and access products, which connect PCs to corporate
networks.
Analyst Chris Stix of Cowen & Co. upgraded Santa Clara, California-
based 3Com to ''buy'' from ''neutral'' and set a 12-month target price
of $45.
The company's stock also was upgraded to ''buy'' from ''market perform''
by analyst Stephen Koffler at Donaldson Lufkin & Jenrette Securities Corp.
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