3Com shares up on takeover talk
CBS MarketWatch - Last Update: 3:40 PM ET Apr 23, 1999
SANTA CLARA, Calif. (CBS.MW) -- Shares of 3Com jumped
17 percent Friday after acquisition talk swept Wall Street.
Speculation has circulated recently that Intel (INTC: news,
msgs), Ericsson (ERICY: news, msgs) or Siemens AG is
interested in taking over the company.
3Com's (COMS: news, msgs) director of public relations, Bob
Ingols, told CBS.MarketWatch.com that the company
doesn't comment on rumors and speculation regarding
acquisitions or mergers.
Shares of the Santa Clara, Calif.-based company gained 3 3/4 to
26 1/16 on volume of 29.5 million shares, about three times its
three-month average daily volume. The struggling stock remains
at about half its 52-week high, notched last December.
Christin Armacost, analyst at Everen Securities, told
CBS.MarketWatch.com that "these rumors are not new."
She said she believes the rumors hit today based on both Siemens' and
Ericsson's recently announcing earnings numbers. Ericsson announced
its earnings results Thursday.
"Looking at 3Com, if these rumors were to be true," she said, "I think
Siemens would be the more likely candidate, just based on (3Com's)
previous relationship with Siemens."
In December, 3Com and Siemens, based in Germany, announced
a $100 million joint venture to offer telephone networking and
multimedia products. See archived story.
"I think there would be some synergy to that relationship. I'm not
actually sure how synergistic Ericsson would be, or Intel,"
Armacost said.
Armacost added that she sees 3Com as engaged in a
reorganization process right now. Speculative takeover talk, she
said, usually begins when companies have hit hard times, often
having disappointed Wall Street. Armacost emphasized that she
was not saying she thinks a 3Com takeover is likely.
3Com said it expects to release its fourth-quarter earnings in
June. The First Call consensus estimate calls for 3Com to earn 23
cents per share.
Ericsson has braced investors for lower earnings in 1999. The
Swedish telecom giant reported a profit of 1.3 billion Swedish
crowns, or $155 million, in its first quarter. The company saw net
sales rise 8 percent to $5 billion. Ericsson also warned it sees lower
earnings in 1999 compared with last year's. Shares of the company were
up 1/16 to 25 5/8.
Intel shares rose 1 5/16 to 62 7/8.
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