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Technology Stocks : COMS & the Ghost of USRX w/ other STUFF -- Ignore unavailable to you. Want to Upgrade?

To: Scrapps who wrote (8762)	11/6/1997 7:15:00 PM
From: David Lawrence	Read Replies (1) \| Respond to of 22053

NEW YORK -(Dow Jones)- 3Com Corp. shares came under pressure Thursday, as concerns coming out of an industry conference about modem shipments and the lack of an agreement on modem standards combined to keep the stock down. 3Com (COMS) closed at $41, down $2.438, or 5.6%. Nasdaq volume was strong at 13 million, compared with average daily volume of 8.2 million. Michael Duran, an analyst at Lazard Freres & Co., said 3Com Chairman and Chief Executive Eric Benhamou told participants at the American Electronics Association conference in San Diego on Wednesday that the company's shipments of modems to distributors still hadn't picked up. The modems are made by U.S. Robotics, which 3Com acquired in June. 3Com has been reluctant to push out modems because it believes the distribution channel has more inventory built up than what is desirable, Duran explained. When inventory builds up, the company is forced to push its products to distributors, often by offering discounts and promotions. To correct the problem, 3Com hasn't really stepped up shipping since the U.S. Robotics acquisition. By doing this, the company hopes to generate stronger demand from its distributors and avoid issuing discounts, Duran said. Additionally, solving the build-up problem will give 3Com greater control over its distribution channel, making its results more predictable. (Hear, hear!) Although Benhamou said he expects to resume shipping later in November, the delay casts some uncertainty on the company's financial results, Duran indicated. 3Com's fiscal second quarter ends Nov. 30, which leaves little time to step up shipping. Another issue that likely dragged down the price of the stock Thursday is the lack of an industry agreement on a standard for 56K modems. To date, manufacturers have offered consumers different standards, which has created some confusion. There has been much talk of progress on negotiations to set a unifying standard. But Duran said Benhamou commented that rival Rockwell International Corp. (ROK) has been dragging its feet lately. Not coming to a quick agreement on the issue only hurts modem manufacturers, Duran said. The analyst said he felt the market overreacted to these developments. He said the modem business is not central to 3Com's fortunes, and that other areas are doing well. 3Com officials declined to comment on the reason for the stock activity.