Yes I guess that is where we disagree.
You say management has shown no ability to perform and I tend to agree with you over the '96-'98 time frame. What has changed is that now mgmt looks at each piece of their business the way a good VC person would.
Think of all their businesses/products as starting out equally capital intensive. The businesses that show success and the ability to grow and become larger entities are giving a disproportionate amount of capital.
The groups that either don't perform or are in fundamentally non-growth markets are given less capital/investment. Not only that, these businesses are scrutinized and put under tight mgmt control to extract every last cent available.
The first fruit of this recent approach has been Palm. I tend to agree with Mehrda? that Palm should not be viewed out of context with 3Com. Managements focus, investment, and synergistic approach to maximize Palm's business model was very impressive. Palm, wireless, infrastructure, new online service, retail distribution, all rolled into one new business model, brilliant.
Can they do it again with any of their other businesses? I don't know, but so far they seem to be "getting it" with their wireless infrastructure wins. Here's where their R&D and patents start to become important. Management has shown the ability to look for and find opportunities within their technology portfolio.
So the Street misses a potential investing machine by focusing on "NICS and Modems suck". Now the mantra is "Palm is gold but 3Com still sucks". My bet is that in a few years one or more of these other investments will come through. People will look back on the '98-2002 time frame and say that the co really knew what they were doing when they invested in the ABC area of XYZ.
What is even more impressive is that management recognized that one of these polished gems, Palm, doesn't match the core company business, so let's spin it off and let the investment take off. WOW.
- Mike |
