Must Read: INTERVIEW - 3Com's Benahmou sees more acquisitions
Reuters - 07:56 p.m Dec 08, 1998 Eastern
SAN FRANCISCO, (Reuters) - As the convergence of voice
and data on computer networks marches onward, the number
two maker of computer networking equipment 3Com Corp. will
step up its pace of small acquisitions, its chief executive said
Tuesday.
''We'll be making lots of acquisitions,'' Eric Benhamou told
Reuters in an interview in San Francisco.
The purchases will range from tens of millions of dollars to a
few hundred million, he said, adding the deals will add to its
efforts with telephone equipment maker Siemens AG to speed
the convergence of voice and data on the same computer
network.
Just last week, 3Com said it bought closely held EuPhonics Inc.
for $8.3 million in cash to get its software for sending audio
signals over the Internet, enabling it to send voice, music and
other audio signals over networks with higher quality.
3Com, along with industry leader Cisco Systems Inc., Northern
Telecom and Lucent Technologies Inc., are racing to sell the
gear that will digitize voice as well as video and send it over
computer networks. Sending voice over networks is far cheaper
and many, including Cisco Chief Executive John Chambers,
expects voice service to someday be free.
''This is the most important thing that's happened to our
industry in a long time,'' Benhamou said. ''This is not a fad.''
While often referred to as convergence, what really is happening
is that old-world voice networks are being translated and
transferred to the digital language of computers. That means it is
going to be a steeper climb for companies like Lucent, North
America's largest maker of telephone equipment.
''The voice people have to reinvent themselves, and they have to
do that without missing a beat,'' Benhamou said, because
technology advances occur so rapidly. Northern Telecom, a
Canadian maker of telco equipment bought Bay Networks
earlier this year for just that reason.
Contrary to Cisco's approach of going it alone and developing
its own voice technology to add to its own data-networking
expertise, 3Com is pursuing a series of partnerships as data,
voice and video converge.
Already, it is working with Siemens, the largest vendor of
PBX, or public branch exchange, phone systems in the world.
''To be able to harness their expertise is pivotal,'' Benhamou
said. ''Siemens is actually much more powerful than Lucent.''
Benhamou also sought to put to rest persistent rumors that is an
acquisition target of companies such as Intel Corp., the world's
largest chipmaker, and others.
''Our acquisition now is not in the cards,'' he said. ''I resolve
to do it alone but with the help of a few strategic partners.''
3Com, based in Santa Clara, Calif., has seen its stock rally from
the low 20s in September to its close of $43.38 on Tuesday.
The stock has rallied, analysts said, as 3Com has at last ironed
out the difficulties of its acquisition of US Robotics announced
two years ago and in September reported fiscal first-quarter
earnings that surpassed analyst forecasts.
''We really turned the corner on that at the end of our last fiscal
year,'' which ended in May, Benhamou said.
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