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

To: Mehrdad Arya who wrote (32713)	7/31/1999 1:23:00 PM
From: The Phoenix	Respond to of 45548

I was trying to manifest the difference between a company that has proven revenues Oh.... you were. Proven to go nowhere in a growth market - not good. I suspect that investors like to see growth in a growth market and thus are drawn to companies that have the promise/expectation of showing 100% qtr/qtr revenue growth.. Here is a snap shot on COMS. Quarter - Reveune, earnings Q1 98 - $1.4B, $64M Q2 98 - $1.2B, $94M Q3 98 - $1.3B, $7M Q4 98 - $1.4B, $64M Q1 99 - $1.4B, $94M Q2 99 - $1.5B, $133M Q3 99 - $1.4B, $90M Q4 99 - $1.4B, $88M You're right...they're proven.. proven to be $1.4B next quarter. Earnings in fact are in decline! This is all occuring while NIC and PC product sales are off due to encroachment by Intel. System product sales continue to grow but are growing a below industry pace - translation, COMS is losing market share there too. You would at least expect this mix to improve margins.... Instead of cutting costs COMS built a new campus in San Jose and recently (if I do recall) opened a campus on the east cost...do I have that right? brand recognition If you think for a second that brand recognition will help COMS market their OS to consumer electronics manufacturers think again. Furthermore COMS has to deal with incumbent OS's..yes, including Sun's JAVA and Microsoft's CE. and much better potential in the the next generation of technologies; in Broadband & Wireless. They are currently getting their butts kicked here by LU, CSCO, ERICY, NOK, MOT, Wireless Knowledge (Microsoft's alliance with Qualcomm). COMS is growing revenues but again, at slower than industry pace. Palm VII is a flop I didn't say that... I believe I said that this is the only industry leading product that COMS has to go forward with but that it's going to be a challenge. I also think....no... I know... that the market for PALM type devices will be hotly contested with lots of price pressure and tight margins - it's a consumer play. I dont' see how this will change the financial picture for COMS. Did you forget COMS has made good use of its capital Really? Building a new campus is a good use? Spending has not slowed even though revenues are flat and earnings are slowing due to increased price pressure. Anyway, I only look at operating income..earnings from investments mean nothing unless they are put to good use.... building a new campus in the face of flat revenues in a market growing at 25% - 30% is not smart. What makes you think that COMS is going up against SUNW, I think with regard to this you are mistaken. COMS is looking to market the PALM OS to consumer electronics manufacturers... right? So is SUN.. they are in competition for that market. I have invested all my liquid asset into COMS because at these prices there just is nothing with more value than COMS. Currently I have two homes in Escrow so that I can take advantage of these garage sale prices. WOW!. You're a brave man. I agree however that COMS is selling at a discount 1.2 times sales. I also agree that the company has some assets that might be interesting for takeover. HOwever, I think trying to become an OS company is a boneheaded move. As a shareholder I think we will get more value out of selling some assets, spinning off the PALM division and refocusing on edge networking. Attempting to compete in the home is a mistake for COMS right now. Two years ago it made sense, but the home is now owned by MSFT and INTC, with edge (gateway products) forthcoming from a wide array of consumer electronics manufacturers who will be using CE, VXWorks, JAVA and other available operating systems. COMS has only a minor role. The best thing they could do is spin-off the PALM division and incorporate Jini, and UPnP so that PALM will interoperate with those in home systems. Sell the NIC... geez... enough already with the NIC's. Intel is putting this functionality onto the motherborads. Then focus on the higher margin networking market. Of course, COMS will have to deal with Cisco there....maybe they should sell this piece to. Um... well... I guess that leaves the PALM product... :-) OG