Dwight, was it you that told me about Briefing.com being so overly enthusiastic on the networking sector?
I think this is a fairly balanced interpretation of yesterday's numbers...
08:30 ET ******
3COM CORP. (COMS) 33 5/8 CLOSED. Networking concern posted a fiscal 3rd qtr net of $0.47 a share, a penny
ahead of Wall Street consensus and five cents better than year-ago net. And while sales rose 30% to $786.8 million from
$606 million in the comparable period, the data and comments from the conference call suggests that company still faces
competitive pressures for the next quarter or two. Thus, while the longer-term outlook is uplifting, at least in the short run,
the stock may remain under pressure, even though the latest financial data matched expectations. According to the latest
report, this is the first in several years in which the company did not show sequential revenue increase as the
company had to matched price cuts by competitors which drove sales and profits lower. Yet, it is encouraging to see that while
the company cut prices of its adapter cards, which prompted the average selling price to fall by 21%, revenue from this
group only declined by 2% on a sequential basis, which means that the company was able to capture a good chunk of the
market. At the same time, pricing pressure and competition from Cisco Systems (CSCO 51 1/8) prompted its
networking systems business to fall by 6% from the 2nd qtr. Again, margins and earnings are set to remain under
pressure for the next couple of quarters which will limit the upside potential for the stock. But longer term, the outlook is
promising, assuming the company is able to properly assimilate its new partner U.S. Robotics (USRX 56 3/8).
They're very optimistic about the longer term (2-5 years). I agree with them. Wouldn't ya'?
sunny |
