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

To: mr.mark who wrote (44484)	9/9/2000 3:12:58 PM
From: Mang Cheng	Respond to of 45548

Roger McNamee, a partner of Integral Capital Partners picks coms in this week's Barrons. Excerpt from the Barron's article : "Q: Thanks, Kevin. Roger, let's talk about some of your favorite stocks. McNamee: Before I start naming names, let me give a little context. The Internet isn't just one thing. It's actually a collection of thousands of networks that are woven together. In that fabric, there are literally millions of interconnecting points, every one of which represents a bottleneck. So from a thematic perspective, we focus first and foremost on taking that infrastructure and removing the bottlenecks from the network. Wall Street tends to think of this constantly in terms of broadband. In my mind, that is a gross oversimplification. The way you get to broadband is by eliminating the bottlenecks in the pipes that already exist. And there are so many of them that it's keeping literally hundreds of entrepreneurs busy as we speak. This fundamental backdrop suggests that you can very comfortably invest in a wide range of component vendors to the semiconductor vendors and a wide range of equipment companies. Most in data networking, but to a lesser extent in certain computer categories. And then a variety of application software services vendors, all of whom support the building out of web infrastructure and ultimate applications and services delivered over the Internet. The challenge in my mind is that the broader concepts are pretty well understood. The winners such as they are in the market today have largely been identified. And valuations reflect pretty high confidence levels about the future. In the long run, it is hard to know how to value some of these companies. Some are growing at rates far in excess of 100%, year over year. And Wall Street doesn't have a lot of experience valuing businesses like that. I don't want to be one to try to judge how one should do that. I think, as investors today, our greatest challenge relates to valuation, not identifying winning companies. Q: So how do you value Cisco Systems? It removes bottlenecks. McNamee: I think Cisco is the acknowledged market leader in the infrastructure business today. It certainly has put together, over the past 2 1/2 years, the most remarkable record of growth I have personally witnessed in 18 years in the business. Where each quarter has grown faster than the previous one for the past 10 quarters. Ignoring valuation, Cisco to me is a truly great company. They have a whole new leg of growth in the voice business. Cisco has been wholly committed to the data business until the past year. And increasingly has set its sights on the traditional telephony markets. There are untold opportunities for them there. So I don't think Cisco lacks for growth opportunities. I do think they have the issues of managing at their scale and of simply having a big market capitalization. Elsewhere, though, in that hardware infrastructure world we are big fans of Extreme Networks. Sycamore Networks, which has been a spectacular success in optical networking. ONI Systems, another more recent IPO in optical networking. Corvis, Copper Mountain and Tut Systems. There are also a lot of very interesting data networking plays. I agree with Kevin that there are huge opportunities in components. Our favorites historically have been PMC-Sierra, Applied Micro Circuits and Hi/fn, in addition to JDS Uniphase, which we no longer own. We do own the others. We have also been an enormous fan over the years of Flextronics International, which is a contract manufacturer that has been the principal outsourcer for manufacturing to the data communications industry. The key thing in these categories is you have to have a position of market leadership that you can translate into upside earnings surprises. Because Wall Street right now has no patience for even ambiguity, much less bad news. Q: Do you find this extreme intolerance of the market a concern? McNamee: I don't get to make the rules. We have to accept the market as it is. I look at this and say, the market has been really kind to us over recent years. Q: So, you have to pay if you want to play? McNamee: If we don't like this market, we always have the option of not investing. Q: But you're not on the sidelines. What software infrastructure players do you like? McNamee: I'm a big fan of BEA Systems, which Kevin mentioned. We also like Portal Software, which is big in billing systems, Informatica, which provides the technology that most of the Websites use to understand what their customers are doing in the site. We like Critical Path. We are huge fans of Exodus in the physical hosting world. And there are two new software players that are private, but I think bear scrutiny. One is Loud Cloud, which is Marc Andreesen's new company. And another is Logic Tier. Q: What else do you like? McNamee: We own a ton of 3Com, which has traditionally been positioned as a data-networking company. But they have a marvelous product for delivering Internet data streams to mobile devices, mostly cell phones. And we think that product is going to help turn that stock around. We own a lot of Metawave Communications, which helps with the transition of analog networks to digital networks. We are also big fans of Wind River and Research In Motion, the guys who make the Blackberry pagers, which in my mind are the most useful of all the mobile devices available today. And I say that as somebody who has got three mobile devices attached to the belt at all times. So that gives you kind of the high view of where we are. interactive.wsj.com Mang

To: mr.mark who wrote (44484)	9/9/2000 3:57:33 PM
From: David E. Taylor	Respond to of 45548

Mark: I have my COMS trading position back at just over $16, and I intend to hold it until 9/26 just before earnings, if it doesn't pop before then. If nothing happens before 9/26 and we stay stuck in this $16-$17 trading range, I'll hold through earnings because I think we're going to see an upside from 3Com's guidance last Q, and the downside would appear to be $15. Low volume indicates that everyone who wants out is out, and everyone who wants in is in. It just needs a catalyst one way or the other, doesn't matter what - earnings surprise + or -, blockbuster product announcement or product delay, analyst upgrade/downgrade, spinoff/no spinoff, whatever, it's going to move before/after 9/26 JMO as usual. David T. P.S. This is the same trading position I bought as COMSV at $12+ pre-spinoff, then sold at $18+ just after. Funny how before this year, every time I got into COMS I lost money, and this year, I can't seem to get it wrong! Having said that, just watch this one go bust!