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Technology Stocks : 3Com Corporation (COMS)
COMS 0.00130-18.8%Nov 7 11:47 AM EST
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To: Al Cano who wrote (29910)4/23/1999 8:47:00 AM
From: Mr.Fun  Read Replies (2) of 45548
 
Some thoughts on 3Com:

1. Lucent will not be the buyer. It is in the process of divesting its consumer business - Palm does not fit in LU's strategy. It is focused on top-line growth - management has suggested that it would divest any businesses it didn't think could sustain better than 10% growth - NICs and modems don't fit. It's microelectronics business is 3Com's chief competitor in the modem business - together, they likely would not pass DOJ scrutiny. The Total Control business is completely redundant to Ascend and also would not pass DOJ.

2. I believe IBM is the best fit, but have no info that big blue is even interested. Any other buyer would likely break up the company. Ericsson would divest NICs and modems, as would Nokia or Siemens. HP would divest total control.

3. USR acquisition has created an unwieldly monster that is trying to move in four separate directions. I understand morale in Skokie is awful and people are leaving in droves. Does not speak well for the future of total control.

4. Nonetheless, 3Com is not Cabletron. There is significant underlying value that is not being recognized in the current share price. However, managment really mislead the analyst community while selling their own shares at an inflated price. 3Com is in the penalty box. The price will not move up significantly without a real catalyst - verifiable take-out offer, blow out quarter, etc.

5. Sooner or later, someone will make a serious offer - $35 or so - and/or 3Com will deliver a couple of strong quarters. Then the stock will move up. I believe that it is worth $40-45.
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