3Com Corporation (COMS) Message Board

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Technology Stocks : 3Com Corporation (COMS)

COMS 0.00130

-18.8%

Nov 7 11:47 AM EST

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To: KyrosL who wrote (34934)	10/6/1999 8:47:00 PM
From: The Phoenix	Read Replies (1) of 45548

Kyros, how come they have pretty competitive broadband modems on the market? I'm not going to beat this dead horse any longer but I'll try this one last time. CPE is a low margin highly competitive market. If COMS is looking to increase shareholder value they need to deliver products that will generate the kind of earnings and revenues that other companies in the infrastructure market are enjoying. Even the start-ups like ATON, JNPR, EXTR, and FDRY are worth as much as COMS...why? Because these are huge growth markets and they are markets where product differentiation can be pronounced. Now, if COMS were to buy MRVC that would improve value. I'd say CS..but do two bad companies make one good one???? I'm not sure... The point is that COMS is not going to be a $25B market cap company selling modems, NIC, hubs, and PALM's. They may enjoy decent margins in new markets (although unit sales will be slow) but margins will erode quickly. All COMS can do is hope that there is enough elasticity in the market to generate reasonable earnings. In the meantime they have to struggle to keep costs down which means less R&D spending than companies that don't have these same constraints. IMO it is not a long term sustainable model. Evenutally the Intels, Sony's, MOT's, and others who have far better economies of scale and lower costs (at transfer cost) will make COMS life unbearable... HEY! I know COMS could buy a foundry!!! OG

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