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

To: Maverick who wrote (10228)	11/13/1997 8:17:00 PM
From: WiseGuy	Read Replies (1) \| Respond to of 45548

Similar explanation for the fall from SmartMoney. _______________________________________________________ 3COM'S INVENTORY GLUT CHIEF EXECUTIVE OFFICERS typically talk up the prospects of their companies at industry conferences -- and their stock sometimes gets a little bounce as a result. But it's been all downhill for 3Com (COMS) ever since management put in an appearance at last week's meeting of the American Electronic Association (AEA). Since that fateful event, roughly half the analysts who follow the modem and networking company have lowered their earnings estimates, according to First Call. 3Com's stock, which had traded at a recent high of about 55 in mid-October, was down to 29 1/4 in midafternoon trading, off more than 5% on the day. The analysts are spooked by three things: lower than expected demand for modems, dangerously high inventories, and Southeast Asia. At the AEA meeting, 3Com management told investors that it would reduce shipments of modems to distributors because end-user demand was slower than anticipated. This modem-demand slowdown can largely be blamed on the ongoing standards war over the 56Kbps modem marketed by both 3Com and rival Rockwell (ROK). Sales from distributors in Southeast Asia slowed in late September and October, and are running below the sell-through rates previously seen in July and August. And although sell-through rates in northern Asian countries like Japan and China have not suffered, there is no way to determine if demand will slow in this region in the near term. Smith Barney's Theresa Murphy has cut her fiscal 1998 earnings per share estimates to $1.98 from $2.38 and lowered fiscal 1999 to $2.53 from $3.10. Even in the absence of more concrete bad news, 3Com shares could trade even lower as more analysts jump on the bandwagon and cut earnings estimates. "The more recent the cut, the deeper they go," Chuck Hill, director of research at First Call, says of the downward earnings revisions. The new consensus estimate, which includes analysts who have not adjusted estimates, is $2.24 for fiscal 1998. -- By Stacey L. Bradford