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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: Elmo Gregory who wrote (30711)	5/8/1999 12:18:00 AM
From: E_K_S	Read Replies (2) of 45548

Hi Elmo - I have been accumulating 3COM shares over the past two weeks at $20 9/16, $21 1/4 and $25 9/16. I have a GTC order for more shares at $24 3/4. I believe there will be more consolidation in the networking companies. I was lucky with Xylan and Fore systems with buy outs and believe 3COMS at these levels provides an excellent long term value investment with the potential of 3COM spinning off and selling some of their assets further enhancing shareholder value. xDSL & cable modem technology will benefit 3COM in the next few years as the end-user demand will help 3COM grow these product lines. Remember 3COM is No. 2 to CSCO in many of their switching and Giga byte LAN products. That's not too bad considering the difference in the PE of CSCO vs COMS... (risk vs reward). Here in Silicon Valley, 3COM is still a large player in the valley. They have very nice facilities and continue to expand....perhaps not as fast as CSCO (they also have big plans for new facility expansion). I have not completed my analysis of 3COMS free flow cash flow and fixed assets but the projected FY2000 earnings are excellent as long as the Palm pilot products continue to grow. The kicker that got me interested in making a large long term investment is 3COMS are their long term plans in China. They have been working over the last few years with the Chinese government agencies to consult and advance the development of their networking technology throughout China (a very large market!). See my previous posts on these emerging events. Elmo, if you can be patient (8-18 months) I see a triple from these levels. The only question that both the street and I am looking for is more detail of their "management plan" describing all of their business segments and how they plan to make it all work. The street was surprised last quarter with the earnings shortfall and warning....Eric B. needs to lay out the master plan, hire the right managers and implement their new strategy with finesse. One way to super charge their future growth, is to spin off some of their legacy networking products/divisions and focus on their high growth PDA and modem products. We will have to wait and see what Interop brings next week. I have about 50% of my total investment position now established. I will be accumulating shares over time as this story develops. I like your idea with Leaps...Jan00 20 & 25. Have you considered the $30 or $35 or going longer to Jan01...these may also provide good returns. I have been selling Oct $17 1/2 and $20 PUTs as this would be an excellent entry point too. EKS

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