26% drop for the following reasons (1) Company is not giving any guidline on this quarter's earning. (2) Rumor of Bay will be acquired. A big combined company could make it tougher for 3COM. On the other hand, this could also make 3COM a acquisition target. (3) The market downturn, many dump COMS for CSCO or ASND.
Many are pissed by COMS management and said problem is in the product, which are not entirely true. 3COM is weak in direct sale, lacking the aggressive of CSCO, almost exclusively sale thru retail channels. System level support is not as good as CSCO, but not a big different. But as far as products are concerned, COMS is in the strongest product cycle in year, other than Modem market is in a slump. (1) Adapter and Modem, COMS is dominate in this low margin business. But dominance in this area also creates a image problem for COMS to sell system product. I think COMS should cut as much expense in this area as possible. (2) Workgroup LAN switch, COMS is a force. (3) Enterprise switch, CSCO Cat5 is generating hugh revenue. Cat5 was early in the market, but with newer switch in the market, Cat5 is way expensive and slow. SuperStack 3900, CoreBuilder 3500, Bay Accelar are better product than Cat5 and cheaper. CoreBuilder 9000 (just GA) is much stronger product. (4) Lan Router - cheaper Layer 3 switching router product positions in front of traditional router to increase LAN router performance and let old CSCO router to handle WAN, again CoreBuilder 3500 has won many new accounts which are not announced. (5)Remote Access product, COMS are OK. (6) Carrier-class remote switch, this is where COMS has no presence. (7)ISP router, CSCO owns it and charges lots of $$ for it. CSCO normally charge $10k for 2 FastEthernet ports which CSCO has nearly 85% gross margin. But ISP is hooked to CSCO for FUD factor, CSCO router is proven, ISP does not want to change it. Even if it means much higher price to pay. |
