Harold: Restructuring takes time. Decreasing investments in slower growth areas of business including analog modems, and increasing investments in higher growth areas is the right direction for the company. As you know, restructuring in any company takes time in some cases maybe years to turn a profit or increase revenues. I believe they are on a fast track mode to make these changes. However, the News yesterday could cause WS & MM analysts to listen. (..Lots of value in 3COM). (CNBC 730am just now mentioned the 3Com news).
According to Investor Relations (Darby)," 3COM is working to bolster shareholder value through 1) a return to predictable, consistent results, and 2) execution of our strategy to increase revenue growth by changing the mix of our business. Both of these efforts require some period of time to be effective. 3Com laid out its strategy to drive revenue growth on our March 23 earnings call. (Management comments from that call can be found athttp://www.3com.com/inside/investor/ceo_cfo_comments.html.) The strategy calls for decreasing investments in slower growth areas of our business, including analog modems, and increasing investments in higher growth opportunities. Over time, we believe that a decreased dependence on slower growth businesses and a larger contribution from high growth businesses will enable the company to grow
more rapidly."
It is my belief, that the high growth areas like the handheld computing, cable, and DSL Modem access, home networking , LAN telephony, voice over IP and wireless networking is the wave and the link to the future. All these areas have the best prospects for high growth and high volume business for companies that can leverage them. In addition, 3Com strengths in technology, manufacturing, distribution and brand are strong assets that can be used to establish a leading position in these emerging markets as well.
As you mentioned, the 3Com announcement of the reorganization of their slow-growing analog modem and network interface card businesses is not much now, however it something at this time. Yes, it could be window dressing. Nonetheless, it is a very positive step and a proactive approach to change the paradigm. As you & I know, WS & MM are always expecting more and 3COM has not shown creditability in the past. Finally, Eric B. needs to instill confidence with WS and MM again since they don't like him. In short, this announcement could be window dressing at this time however it's a change in the right direction. Changing WS & MM opinions of Eric B.might be very hard to do because bad feelings last a very long time. WS & MM needs to take bad feeling of Eric B. out of their formulas and quantify the company only. --Thanks for the response. |
