More CC: 3Com <COMS.O> CEO sees Q4 as turning point
Their comments came shortly after 3Com posted fiscal fourth-quarter
earnings, excluding acquisition charges and gains, of $66 million, or
18 cents a share, slightly ahead of expectations. That compares with
$42 million, or 12 cents, in the quarter ended in May 1997.
The results pushed 3Com stock up in after-hours trading Wednesday to
$29.50, a gain of $2.375 from the price at the close of the regular
trading session.
During the conference call, 3Com executives discussed the progress the
company had made in resolving product distribution problems that led
to a glut of inventory in recent quarters.
"You can assume that this operational issue has been nailed," Benhamou
said of 3Com's goals for managing product inventories in each of three
broad categories -- including network adapter cards, modem and larger
network systems.
The number of days it took the company on average to book sales for
products it shipped -- another key measure of inventory management --
dropped to 56 days from 64 days in the February quarter.
Paisley said gross profit margins as a percentage of sales were 43.5
percent, "up sequentially, albeit slightly" from the third quarter. He
said 3Com expected to show a larger increase in gross profit margin
during the first quarter.
He also spoke of the progress 3Com had made in cutting back expenses,
especially in sales and marketing, saying the company has a way to go
to achieve its long-term goals. Total expenses fell to $511 million
from $552 million in the final quarter of the last fiscal year.
As part of its effort to cut costs and complete the integration of
last June's merger with U.S. Robotics, Paisley said the company had
reduced its work force in the fourth quarter by 845 people, or 6
percent worldwide.
Thanks to a successful hedging program, the company recorded a gain
of $1 million for translating revenues denominated in foreign
currencies back into U.S. dollars in the May quarter versus a loss of
$8 million in the February quarter.
((-- Eric Auchard, New York newsdesk, 212-859-1840))
REUTERS
Rtr 19:17 06-24-98
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