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Technology Stocks : 3Com Corporation (COMS) -- Ignore unavailable to you. Want to Upgrade?

To: Edwarda who wrote (32053)	6/23/1999 11:42:00 AM
From: polarisnh	Respond to of 45548

3Com shares drop on revenue warning Fears overshadow 35% jump in fourth-quarter profit By Jeffry Bartash, CBS MarketWatch Last Update: 11:27 AM ET Jun 23, 1999 NewsWatch SANTA CLARA, Calif. (CBS.MW) -- Shares of 3Com dropped 13 percent Wednesday morning after the computer networker warned that revenue may retreat in the next two quarters from year-ago levels as sales of older products continue to shrink. 3Com's stock fell 4 3/8 to 27 1/8 on volume over 8 million shares in recent trading. The company's rough ride also weighed on the Amex Networking Index, down 2 percent. "Investors are spooked by the fact that it could be a while for the company to work through these issues," said Matt Barzowskas, an analyst at FAC/Equities. A few Wall Street analysts were spooked as well. Gruntal & Co. analyst David Takata sliced his rating on the shares to "hold" from "strong buy." Needham & Co. cut its opinion on the stock to "buy" from "strong buy." "The cautious management guidance is not new, but now appears to have an increased sense of urgency," Takata said in a research note. The warning overshadowed a 35 percent increase in fourth-quarter profit from operations, as 3Com boosted sales of its popular handheld PalmPilot electronic organizer. Separately, the company (COMS: news, msgs) said it would buy back up to 15 million shares. 3Com announced a 10 million-share buyback when it released third-quarter results in March. The world's second-largest maker of computer networking products said profits excluding special items rose to $88 million, or 24 cents a share, in the fourth quarter ended May 28, up from $65.9 million, or 18 cents, a year earlier. 3Com was expected to earn 23 cents a share, according to the consensus estimate of analysts surveyed by First Call Corp. Sales, however, climbed a meager 3.6 percent to $1.42 billion from $1.37 billion a year earlier. Although sales of the PalmPilot are surging, revenue from phone modems, PC-connector cards and related items have been declining amid intensified competition. That's prompted the company to reorganize and focus more on the Internet and products for lucrative high-speed web access. That push helped lift sales of network systems, which includes switches, routers and other products used by corporations, Internet service providers and phone carriers, 17 percent to $784.7 million. It also accounted for a record 55 percent of total sales, 3Com said. Yet those gains were mostly offset by a 10 percent decrease in client-access sales to $630.9 million, which includes the modem business. Revenue from those products are expected to fall further, causing flat to slightly lower earnings in the next two quarters, officials said during a conference call with analysts. "There is value in the company, and there are parts of the business that are doing very well, but the anchor on the boat right now is the declining network interface card and modem business and they have to deal with that" said Barzowskas.

To: Edwarda who wrote (32053)	6/23/1999 11:44:00 AM
From: Boris Reynov	Read Replies (1) \| Respond to of 45548

From Thomson: 23-Jun-99 11:26:12 Shares of 3Com are being pressured by revenue concerns today. After the close yesterday, the firm reported FY99 4Q earnings of $0.24, a penny ahead of expectations, but warned that revenue is likely to fall on a year-over-year basis in FY00 1Q and 3Q. In reaction to the revised outlook, several sell-side analysts have trimmed their earnings expectations for the firm. Shares of 3Com are down $3 11/16 to $27 13/16 on volume of 11.4 million shares. There is a lot of speculative trading going on in today's session with just 14% of total volume related to block transactions. It appears day traders, both professional and retail, are behind the bulk of today's volume. Part of the explanation for this lies in the fact that previous earnings worries caused the stock to fall to a new 52-week low of $20 in April from a high of $51 1/8 in December. The stock has languished in the mid- to upper-20's for some time. Most of the aggressive growth and momentum investors who focus on near-term earnings and price growth have already exited the stock, leaving just the long-term value oriented investors as shareholders. The pre-trade data is consistent with this, showing there are a number of institutional brokers skimming the market for 3Com at "discount" prices while any short-term oriented investors who ventured back into the stock are bailing once more.