WSJ report on 3Com earnings, nothing new:
3Com Beat Analysts' Estimates
For Its Third-Quarter Earnings
An INTERACTIVE EDITION News Roundup
3Com Corp. reported better-than-expected earnings late Thursday.
The Santa Clara, Calif., network-equipment maker, which endured a stock selloff and made a huge acquisition this quarter, reported third-quarter net income of $87.6 million, or 47 cents a share, compared with $74.6 million, or 42 cents a share, in the same period a year ago. That topped estimates of 46 cents a share forecast by analysts surveyed by First Call Inc.
Sales for the quarter rose to $786.8 million from $606 million in the same period a year ago.
The company said sales of systems products, including switches, hubs, internetworking and remote-access products, were $432.6 million for the quarter, an increase of 24% compared to the year-ago period. Sales of network adapters, meanwhile, increased 39% from the same quarter a year ago, to $346.3 million.
3Com agreed to acquire modem maker U.S. Robotics Inc. last month in a stock transaction valued at $6.6 billion, the second-largest high-tech merger ever. The move was seen by a bold step by the No. 2 company in the unglamorous but extremely lucrative computer-networking market to try and make up ground on Cisco Systems Inc., the industry leader.
Shares of 3Com rose $1.4375 to $33.625 Thursday, helped by Wheat First Butcher Singer starting coverage of the company with a "buy" rating. According to Instinet Inc., shares were up $1.3125 in after-hours trading. But despite the day's advance, the shares have fallen more than 60% since the first of the year.
Computer-networking companies like 3Com are in the business of supplying the "plumbing" used to link computers. Sales of networking equipment have skyrocketed with the growth of the Internet and with the push by big companies to connect their sprawling collections of mainframes, desktop personal computers and other machines into a single, cohesive unit.
By adding U.S. Robotics' modems to 3Com's growing product offerings. In doing so, 3Com is taking a page from Cisco's playbook of buying the technology it doesn't have. In addition to moving on Cisco, analysts said, 3Com also is targeting a lucrative networking niche carved out by Ascend Communications Inc. for "remote access devices." These products, mostly purchased by companies that provide Net access and local telephone companies, allow outside computers to use regular telephone lines to connect to a company's network. |
