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Technology Stocks : 3Com Corporation (COMS)

COMS 0.00130

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Nov 7 11:47 AM EST

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To: DownSouth who wrote (24006)	11/4/1998 11:34:00 AM
From: joe	Read Replies (1) of 45548

>>I just don't believe that the market for the new storage product line is ready for channel sales. Channel sales require a movement of the product to a commodity, rather than a head to head competitive environment.<< My understanding is that channel sales are not only for commodities, but for highly sophisticated hardware which the customer needs help with, and for companies that just can't/don't want have a continuously large sales force. >>(I could be wrong. Perhaps the network attached storage market is there, but NTAP and EMC are growing as a result of strong, motivated direct sales forces.)<< I would think that the reason COMS is selling the storage devices is to add value to end-to-end solutions. These are products that have been requested by customers. The fact that COMS can offer a "full solution" is one of its great strengths. >>Their stock options are not "in the money" and their management is confused as the USRobotics and COMS cultures clash. Now the rumors of an acquisition...<< How current is your info? COMS is turning the corner. From what I've heard, the USRobotics and COMS sales coordination has made large improvement and keeps getting better. >>There is one more issue to discuss. Margins. The biggest component of network attached storage sales is disk drives, where the margins are pathetic.<< Another reason, why COMS would have an advantage selling these products in a "full solution". If margins are that low, then it's harder to make $$ selling individual units. >>What proprietary component from COMS will produce good margins in this market?<< If you're talking about other COMS products, there are a lot. Look into it and you will find out. You'll also find out that COMS is efficiently reducing costs...another great way to raise margins.

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