From WSJ...3Com To Add Oper Chief, But CEO Says
He's Not Bowing Out
By MARK BOSLET
Dow Jones Newswires
PALO ALTO, Calif., -- 3Com Corp. (COMS) plans to add
a chief operating officer to its executive ranks, but Chief
Executive Eric Benhamou said he has no plans to step aside
after the new senior manager comes aboard.
Rumors that Benhamou is considering leaving the No. 2
networker - which have been sifting through industry circles
and across Wall Street over the past couple weeks - have no
basis in fact, Benhamou told Dow Jones.
"These rumors are ill-founded," he said. "I've never thought
about this."
It is quite natural for people to think of a COO as an heir
apparent, Benhamou said, but that is not 3Com's primary
reason for expanding its upper management.
The Santa Clara, Calif., company, whose networking
products range from adapter cards and modems to switches,
started looking for a chief operating officer this spring as it
began to refocus its sales strategy on "converged" networks.
The convergence in question is that of data networks and
voice networks, which are steadily becoming one.
After acquiring US Robotics Corp. last year, 3Com realigned
itself into four business units, each focusing on one of four
markets: consumer, medium-sized business, large company
and carrier. With convergence taking hold, 3Com needs an
executive to unify these efforts, Benhamou said.
Benhamou also noted that 3Com's management team is
about the same size it was back when the company had $3
billion in annual revenue; results for the nine months ending
March 1 show sales so far this year at more than $4 billion.
Executive recruiting efforts often take six months to a year,
but the company is confident its search won't drag out.
3Com has had extensive discussions with several
well-qualified people, said Benhamou, who added he would
be surprised if the search took a year.
Benhamou, while emphasizing that he intends to stay with
3Com - in fact, that he is "more committed" to the
company than ever - added that he does see his role
changing somewhat with the addition of a chief operating
officer to handle many day-to-day operations.
The CEO's role will be more of a "chief strategist" and a
lead spokesman for the organization, he said. And while
Benhamou said he would continue to be accountable for the
financial performance of the company, said he would have
more time to spend with customers and other "external
constituents."
Benhamou went on to say inventories at 3Com continue to
remain under control. The maker of network equipment
suffered from swollen inventories and, consequently, slower
growth earlier this year, but said it relieved that swelling
during the third quarter, which ended March 1.
"The problem has been nailed" and "remains under
control," Benhamou said.
He also said pricing pressures produced "no surprises" or
"deviations" from the company's fiscal plan in recent
months. "On balance, (they are) what we expected," he said.
Pricing pressures in certain networking product categories -
especially among workgroup switches and modems -
increased earlier this year. The company plans to release
fourth-quarter results the week of June 22.
3Com also plans more aggressive efforts to reach small and
medium-sized businesses. One effort will be to broaden the
company's network of resellers from about 20,000 today.
"We will probably triple that this year," Benhamou said.
Meanwhile, 3Com will continue to consider acquisitions to
expand its product line and opportunities. These acquisitions
will be "more narrowly focused and more narrowly defined,"
he said.
"Today, we don't need to acquire any major capabilities,"
Benhamou said.
-By Mark Boslet; 650 496-1366 |
