<<Growth is not as important as profit margin>>
That's a bull. Growth is as important as profit margin. Especially if you consider Cisco sky-high valuation. It is clear that Cisco is in a slower growth period (look at the last 2 quarter sequentialearning growth). Do not want to stuck with a overpriced stock and go into a safer one - dump CSCO and get COMS, at least the last two-month shows a new trend for COMS - a turnaround story at low valuation.
Montgomery Names 3Com Top Pick In Networking Group
Dow Jones Newswires
NEW YORK -- Shares of 3Com Corp. (COMS) were up more than 6% after NationsBanc Montgomery Securities Inc. analyst Al Tobia reiterated his buy rating on the stock, calling it his "most timely recommendation."
In a research note, the analyst said recent distribution channel checks indicate the data networking company is seeing the first pickup in sales of systems products through the distribution channel in more than a year.
This is significant since bloated inventories had plagued 3Com in the channel through the first half of the year. The company had slowed production to bring inventory levels down.
Tobia said 3Com's outlook is also improving because the company's fiscal second quarter, which ends in November, tends to be a seasonally strong one for modem sales.
Sales of 3Com's new v.90 modems, which can transmit data at 56 kilobits per second, were sluggish earlier in the year, even after the adoption of an industrywide standard for 56K modems in February.
Since the inflated inventory levels hurt 3Com's revenue over much of the past year, the company should be up against easy year-over-year revenue and earnings comparisons in the second quarter, Tobia noted.
The analyst projects 3Com will report earnings of 33 cents a share on $1.53 billion in revenue for the period, up from 1 cent on $1.2 billion a year earlier.
3Com's operating margins should also continue to improve, Tobia believes, as operating expenses as a percentage of sales decline.
Finally, Tobia said 3Com should benefit from the emerging market for networks in the home - a market that he believes will grow to about $4 billion by 2002 - and ongoing strong demand for PCs.
3Com's shares were recently up 2 1/8, or 6.2%, at 36 7/16 on Nasdaq volume of 9.7 million, compared with a daily average of 7.7 million. |
