Santa Clara, California, Aug. 27 (Bloomberg) -- 3Com Corp.'s sales growth may be
temporarily held back by delays in setting an international standard for new high-speed
Internet communications, a Wall Street analyst said.
Shares in 3Com, a maker of modems linking computers to the Internet and other
networks over phone lines, fell 1 3/8 to 48 1/16 at midmorning, its lowest level since
July 3. More than 7.9 million shares changed hands, making it the second most-active
stock in U.S. markets. 3Com stock fell 5.8 percent yesterday.
A delay by the International Telecommunications Union in setting a standard may push
an expected surge in sales for 3Com's U.S. Robotics brand modems to mid-1998
from earlier that year, said Paul Meeks, Director of Research at fund managers Jurika
& Voyles LP.
"Some analysts are saying this is a short-term negative because people will put off
buying modems until there's a standard," Meeks said.
3Com is battling for market share and for setting the standard for 56 kilobit-a-second
modems with Rockwell International Corp. and Lucent Technologies Inc. 3Com's X2
standard is incompatible with Rockwell's and Lucent's K56Flex standard.
All companies producing the chips and the modems for 56K communications have said
they favor an international standard and will adopt it once it's set.
Meeks said he believed that delays in 3Com modem sales would only be delayed, not
lost.
"I think the concern is overblown," said the fund manager, whose funds held 3.7 million
3Com shares at the end of June.
The possibility of a delay first appeared in the trade magazine "Network World" over
the weekend and was echoed in a report yesterday by Salomon Brothers Inc. analyst
Peter Swartz, Meeks said.
"A large percentage of desktop modem buyers are influenced by their corporation
and....without a standard, a large percentage of these organizations may be reluctant to
adopt and support 56K technology," Swartz wrote. |
