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

To: hdl who wrote (45243)	3/14/2001 12:37:04 PM
From: KyrosL	Read Replies (1) \| Respond to of 45548

The way I see this is I am getting a dollar for 50 cents. I know that it seems that 3Com management is not anything to write home about, but we should not forget that in the last few years companies like 3Com whose stock languished were at an enormous disadvantage versus companies, like Cisco, whose stock soared, and who had the balls to take advantage of their high stock price to the fullest. I pick Cisco just as an example. Many of 3Com's competitors are in the same or even worse predicament. Cisco's meteoric rise was essentially a virtuous cycle that took full advantage of its high stock price -- from employee stock options assuring high quality people and hefty tax advantages to "no cost" acquisitions of state of the art technology. Now the cycle is turning vicious. Cisco's cash position on a per share basis is far far weaker than 3Com's. In fact, if one takes into account Cisco's exposure to vendor financing, one can argue that at the end of this year 3Com will have more cash at hand than Cisco. The recent rumors about Cisco's intention of buying back its stock are laughable. Even if Cisco expends all its cash buying back at $20 per share, it will be able to buy less than 3% of its float! On the other hand 3Com's already announced $1 billion stock buyback can retire 45% of its float at $7 per share. In a downturn, cash is king.