More: 3Com's New President Set to Make 'Big' Work:
Bloomberg Profile - Bloomberg News, July 17, 1998, 11:45 a.m. PT
3Com's New President Set to Make 'Big' Work: Bloomberg Profile
Santa Clara, California, July 17 (Bloomberg) -- When word
got around last March that Bruce Claflin wanted to leave Digital
Equipment Corp., the computer-industry veteran was inundated with
calls from prospective employers. There was one problem.
''They were all start-ups,'' said Claflin, 46.
After 22 years at International Business Machines Corp., the
world's largest computer maker, and almost three years at Digital
heading its personal computer unit and sales and marketing,
Claflin was used to companies that were up and running.
When 3Com Corp., the world's No. 2 maker of computer
networking equipment and the PalmPilot, called about taking over
its daily operations, Claflin jumped. He knew full well that 3Com
was struggling to swallow a big acquisition and trying to boost
its sagging stock price.
''I know how to make 'big' work,'' he said.
On Wednesday, Claflin was named 3Com's new president and
chief operating officer. He will head its four business units and
marketing, sales and human resources. His first task: Sorting out
bloated inventories and pushing sales.
'Big' at 3Com means a $10.9 billion market capitalization,
more than 12,000 employees and 1998 sales of $5.4 billion -- 3.6
percent lower than last year. The company's stock fell from a 52-
week high of 58 3/8 on July 16, 1997 to a 52-week low of 24 on
June 1. It recently traded at about 30.
Claflin will report to Eric Benhamou, 42, the company's
chairman and chief executive, who wants to be free for strategic
planning. Three other 3Com executives, who overseeing finance,
planning, technology and the PalmPilot, will continue reporting
to Benhamou. Claflin won't have a seat on the company's board.
''I'm the No. 2 man, but I'm not the heir apparent,''
Claflin said.
Not A Cakewalk
He's the make-it-work guy, and his job won't be a cakewalk.
3Com faces stiff competition from larger Cisco Systems Inc.,
based in San Jose, California. Claflin's new company is also
struggling to return to the profitability it enjoyed before its
June 1997 acquisition of US Robotics Corp., then the No. 1 maker
of modems linking computers to the Internet.
The $8.54 billion purchase increased 3Com's revenues by 78
percent, but it also doubled the number of employees and
products. Sales slowed, especially sales for US Robotics
products. 3Com's pro-forma profit, including financial results
for the newly acquired company, plunged more than 90 percent the
last two quarters.
''It was a big acquisition they're still trying to digest,''
said Eric Efron, portfolio manager of the USAA Aggressive Growth
Fund, which owns 378,000 3Com shares.
A 'Change Agent'
It's not the first time Claflin has been brought in to firm
up the shaky part of a large technology company. In 1995, he left
IBM, where he led the introduction of its successful Thinkpad
line of portable computers, to take over Digital's PC unit.
His assignment: make Digital one of the top five U.S.
personal computer makers. Claflin eventually assumed all
Digital's sales and marketing, but he never achieved the PC goal.
While Claflin made some improvements, the PC unit was ''a
disaster,'' said Kim Brown, an analyst with Gartner Group Inc.'s
Dataquest market research unit.
''When he got there, (the PC unit) was incredibly
unprofitable and when he left, it was posting some profitable
quarters.'' he said.
The same can't be said of marketing. ''He never got that
turned around,'' he added.
Digital, based in Maynard, Massachusetts, was bought by
Compaq Computer Corp. of Houston in June, and Claflin decided to
take a $1.7 million severance package.
The biggest problem with Digital's PC business, Claflin
said, was swollen inventory. It plagues 3Com as well. Soon after
its acquisition of US Robotics, 3Com management discovered that
the inventory of computer modems held by distributors was much
higher than previously thought.
Inventory Bloat
Claflin didn't want to talk specifically about the
acquisition or inventories in an interview just after the
announcement of his hiring, but managing 3Com's supply chain and
''lowering and turning inventories'' will be among the first
tasks he tackles when he joins the company Aug. 10, he said.
''Bruce has been a change agent before,'' Benhamou said,
''And that's what we expect of him here.''
Claflin graduated from Pennsylvania State University with a
political science degree and began his career at IBM as a sales
manager. He rose through the ranks and in 1992 became head of its
laptop business.
His strategy for knowing what customers wanted, wherever he
worked, was travel and more travel, he said. The belief took him
to locations as diverse as Tokyo and Omaha, Nebraska, to see what
people thought.
''A desk is a dangerous place from which to view the
world,'' Claflin said, quoting a line from a favorite John le
Carre novel.
Claflin, who will work from 3Com's headquarters in Santa
Clara, California, will travel a lot in the next year, not always
on business. He'll commute between Silicon Valley and the Boston
area for at least a year while his daughter finishes high school.
The work will be worth the trip.
''The job came out of the blue,'' Claflin said. ''But I'm
ready to run this organization.''
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