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

To: KyrosL who wrote (45231)	3/12/2001 4:01:26 PM
From: Mehrdad Arya	Read Replies (3) \| Respond to of 45548

Kyros, with $2.45 Billion in cash and a market cap of $2.18 Billion I am astonished to see the stock falling. I even discounted their cash position for the earnings shortfall and one time charges slated for this quarter and I am still amazed at how the stocks prices continues to fall. If you read my prior posts you will notice why I am not shocked to see the likes of Cisco falling into their mid teens. Why shouldn't they, just look at Cisco's fundamentals and earnings outlook and you shouldn't be surprised. As of last quarter their cash position was 67 cents per share and their head count was close to 48,000 employees. Their cash position relative to their head count should be noted with trepidation especially in a slowing market. Now compare this with 3Com's and you should feel much safer. Now lets manifest the truth in our 3Com vs. Cisco analysis. 3Com's stock has performed much better than Cisco's in the latter 18 months. You should note that for every 3Com share you would have also got 1.5 shares of Palm, this included would show a capital gain for 3Com investors while a substantial capital loss for Cisco. I also feel 3Com is far better positioned structurally than Cisco. It has 20% of Cisco's head count, 10 times more cash per share and it is far better integrated as a company today than Cisco. While 3Com has become more ductile with time Cisco has got more brittle. For this reason I feel this slow down benefits 3Com while it hurts Cisco. The slow down in spending by the Telcos is only a hiatus for consolidation in a market that was in much need of consolidation. In the meantime the excess competition will attenuate and the companies that survive this Natural Selection will return with better margins, hence we will once again see healthier growth. 3Com's cash position, focus and restructuring will make it a better an nimbler competitor in the Emerging markets while enabling it to maintain its' market share.