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

To: beckya who wrote (44933)	11/29/2000 9:57:48 PM
From: Mehrdad Arya	Respond to of 45548

For those of you who may need comfort in these trying times I seriously suggest a little dd by reading the following: The FY'01 Results and CEO Comments 3com.com ... Detailed progress report Let me now do a quick checkpoint of the 7 progress milestones we laid out on March 20th, and reviewed again last quarter. Milestone 1: to completely exit our high end LAN, high-end WAN, and analog modem businesses by the end of Q1. This milestone was met. While I only mentioned our high-end LAN and WAN businesses in my earlier comments, you are probably all aware that a few weeks ago, we also established a new company named US Robotics, in which we retained a minority interest, and to which we transferred our analog modem business. Milestone 2: to complete the bulk of our headcount reductions of approximately 2000 people by the end of FY'01 Q1. Milestone 2 was met as well. Our headcount declined by 1650 since our March 20th announcements. And while we are hiring in support of our growth businesses, we expect total headcount to fall by another 1200 approximately upon completion of the transfer of our manufacturing assets associated with the analog modem business. Milestone 3: to reduce our average channel inventory from the 5 to 7 week range to the 3 to 5 week range by the end of FY'01 Q1. I can confirm to you that milestone 3 was also met. Milestone 4: to resume sequential growth in Q2. Clearly, we met that milestone in Q1, three months earlier than planned. And we expect sequential growth to continue in Q2. Milestone 5: to return to profitability in Q3. We told you last June to more conservatively plan for Q4 to be our next profitable quarter from operations. Although we expect to post net profits as early as Q2 due to non-operating gains, we continue to stand by our June guidance. Milestone 6: to grow at or above industry average in Q4 (>=20% Y/Y) Milestone 6 is on track as well. This will be reflected in the increased revenue guidance that Mike Rescoe will give you in the next few minutes. Milestone 7: to achieve our new financial model in FY'02 While we have more work to do, our Q1 performance indicates we are on track to achieve milestone 7. Conclusion Let me now conclude and offer some remarks on our future outlook. Q1 was a strong, bounce-back quarter, during which we established a more meaningful baseline for our business, clear market and product line metrics to track our progress, a new brand, and a spirit of focused execution. We are obviously encouraged by these results, but at the same time, highly aware that good execution must continue in order to create shareholder value. As we look to Q2 and beyond, we must consider the various challenges that we will face: First, the component shortages and other supply chain difficulties that have plagued our industry in the last few months are likely to continue; The labor market continues to be very tight, particularly in Silicon valley, making recruitment and retention of employees very competitive; While we are enjoying some early successes in new customer markets like with consumers, we must extend them by creating new product and service categories and sustainable business models; We must introduce several major new products in the coming weeks and months, and cannot afford to mishandle any of the transitions; and Our stock is trading at a discount compared to our peer group, making stock based acquisitions less affordable than other companies whose stock is trading at a premium. Contrasting with this list, several other factors are weighing in our favor: We are currently enjoying positive momentum, which creates throughout the company a morale dividend associated with growth. This compounds with the fact that virtually all our employees stock options are in the money; Our business focus is sharper and our company is simpler to run than at any time in the recent past, which breeds a higher quality and speed of execution; Our brand campaign is being well received, and we expect this marketing investment to stimulate demand for our products and solutions; Our balance sheet continues to be very solid, as evidenced again in Q1; Our fall quarter has typically been a strong seasonal quarter for 3Com; and And we are entering a rich new product cycle across our three customer markets. In balance, the scale is tipping more strongly to the favorable side than a quarter or two ago, and I am pleased with the overall progress this far. Let me now turn it over to Mike Rescoe, who will give you a more detailed report on our financial performance. Afterwards, we will both be available to answer your questions...

To: beckya who wrote (44933)	11/29/2000 10:26:20 PM
From: Mehrdad Arya	Read Replies (2) \| Respond to of 45548

I can not believe how a company with 3Com's metrics could be selling at $12.5. A Book Value of $11.86 A Price to Sales multiple of 1.09 (ttm) 1.18 (forcasted) A Debt/Equity ratio of ZERO A Cash position of $2.7 Billion A Growth rate of 20%+ The aforementioned multiples don't even manifest the company's true assets, that includes their investments, patents and real estate. An important multiple used by many financial wizards is to buy companies that trade at a P/E multiple that is half the a company's projected growth rate. THIS IS CONFIRMED Another valuable metrics pertains to the company's liquidity. Here again the company passes with shining armor. The company has manifested that they repurchased 33 million shares for a total commitment of $508 million. I take this to be an extremely bullish disposition by insiders as to the company's future. It should also be noted that the company has set aside another $500 million for repurchasing of the company stock. Extremely Bullish!!!!! Now here is the challenge! Can anyone manifest any company in the USA with similar multiples, metrics and financials? This is why 56% of the outstanding shares of 3Com are owned by institutions. They know value when they see it.