3Com warned that "a significant fluctuation in foreign currency
could have an adverse impact on the company," and that
instability in the Far East may increase credit risks as
weakening Asian currencies lead to late payments or
bankruptcies.
"Depending on the situation in Asia in coming quarters, any or all
of these factors could adversely impact the company's financial
results in future quarters," 3Com said.
However, 3Com has no intention of abandoning its Asian
customers, but may have to increase its exposure to the local
currencies to compete. "Should the Asian economic environment
fail to improve," 3Com said, "the company would consider
continuing to expand its exposure to foreign currencies to
preserve long-term customer relationships."
Just as the Asian crisis is a concern, fierce competition could hurt
3Com, as well.
"As new competitors enter the market and offer competing
products, pricing may be affected," 3Com said. "The company
believes there is a risk of downward pricing pressure on the
company's products, including products incorporating 56-Kbps
modem technology. Pricing pressure intensified across a variety
of the company's products during the second quarter of fiscal
1998, and may intensify in coming quarters."
3Com [COMS] traded in the $70 range last year before falling. In
late-afternoon trading on Tuesday, shares of 3Com were up 2 3/8
to 31 3/4, a rise of 8 percent. |
