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Technology Stocks : 3Com Corporation (COMS)
COMS 0.001600.0%Nov 26 9:30 AM EST
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To: Amir Desai who started this subject3/1/2001 9:25:37 PM
From: Mehrdad Arya   of 45548
 
A couple of facts of note, the 3Q is notoriously known for being the weakest quarter of the year, earnings were expected to be around -14 cents/share, the telecom sector is in turmoil and the economy is slowing.

Having said the above, we should note that the company has taken steps to cut costs that should save the company approx. $250 million per year, this is 74 cents/share. The company also makes approx. $180 million in interest on its $2.5 billion of cash. Fortunately the company has no debt servicing, ergo Zero debt and no pile up of inventory like Cisco etc.

I don't think the US, or for that matter the world economy, is going into a depression, quite to the contrary what is happening is consolidation which is nothing but a much necessary reprieve that was needed for an over heated tech sector. The next phase of growth will be generated by the Telecom sector and the orders will start flowing soon. For the Telcos not to invest in the next generation of telecom is like signing their death warrants.

Remember growth has slowed and in many ways this can be construed as a blessing in disguise for company's like 3Com. It allots them more time to get their act together while their competition stays in the doldrums. 3Com has the wherewithal to compete and prevail, which puts them in an enviable position that is rare among most tech companies.
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