3Com to cut 500 jobs, transfer others
David R. Baker, Chronicle Staff Writer
Wednesday, January 16, 2002
San Francisco chronicle
In a sign that last year's wave of job cuts in Silicon Valley may not be over, 3Com Corp. said yesterday that it will cut an additional 500 employees.
The job losses will bring total employment at the Santa Clara computer networking company down to 5,400. When technology sales collapsed in late 2000,
3Com employed about 12,000 people.
In an interview last week, the company's chief executive officer said 3Com would continue paring staff as part of its continuing reorganization. The cuts, however, will be more targeted than last year's extensive layoffs, made when the company was desperately slashing expenses.
"Over the rest of this fiscal year, we will have a reduction in force, but the size and the scale won't be what we saw in the past," said Chief Executive Officer Bruce Claflin. "It's function by function, business by business."
The company declined to say how many of the 500 people affected work in the Bay Area or list the company divisions involved.
In addition, 3Com said yesterday that it would transfer an undisclosed number of employees within the company, moving their job functions from the heart of the corporation to some of its individual operating units. Those involved work in 3Com's corporate marketing, human resources and financial research offices.
The news drew little reaction from Wall Street. 3Com's stock price inched upward following the morning announcement, then drifted down to close virtually unchanged at $6.10.
"It seems a minor tweak," said Jay Ritter, an equity analyst with Morningstar in Chicago. "They have a really strong balance sheet, they've done a lot of cost cutting, they've got some decent products, and they had what appeared to be a better-than-expected quarter last quarter. But I think people are still a bit skeptical about their restructuring turnaround."
Clifton Gray, vice president of equity research at Kaufman Bros. in New York, said continual layoffs could seriously sap 3Com employees' morale.
"If I heard there were going to be cuts the rest of the year, I'd get my resume together," he said.
The move comes at a time when 3Com's sales have slowly started to rebound, after plunging for much of last year. Although the company has lost money for the past seven quarters, executives hope to show a profit again starting in the fourth quarter of this fiscal year.
Employees who lose their jobs in this round of cuts will receive 60-day paid notification, followed by a severance package determined by the length of employment at 3Com, a company spokeswoman said. Severance packages will vary from a minimum of one month's pay to a maximum of three months' pay.
E-mail David R. Baker at dbaker@sfchronicle.com.
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