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

To: Bruce L who wrote (10783)	11/25/1997 3:00:00 PM
From: Rock	Respond to of 45548

Top Stories: 3Com Battles to Recover from Recent Travails By Kevin Petrie Staff Reporter 11/25/97 12:16 PM ET Not sure if i should do this or not but - I think its important for you all to read this - especially craig - COMS is up 1 1/8 as I post this!! For thestreet.com.... 3Com (COMS:Nasdaq) has struggled to regain its footing after getting clocked by investors this summer. Will it be able to do so? The struggling networker's swift fall from grace is reminiscent of the Shiva (SHVA:Nasdaq) debacle. Once the hottest of Internet plays, Shiva took only one full Internet generation (since June 1996) to skid from 85 to 9. Previously ballyhooed, the company is now fighting to survive. Is 3Com going the way of Shiva? Since Oct. 8 the stock has lost 39.8%, ending down 1 7/16 at 33 9/16 on Monday. The company now trades at 29.2 times trailing earnings, pretty modest compared with industry leader Cisco's (CSCO:Nasdaq) 47.8 price-to-earnings multiple. Investors are smacking 3Com for the bloated inventories in its acquired U.S. Robotics unit. But most investors do not believe 3Com is another Shiva. Shiva, the classic case of a networker gone wrong, crashed because an unanticipated market shift ushered in the larger competition and left its single low-end technology out in the cold. No doubt 3Com is struggling, but the company has not cornered itself in a Shiva-like fashion. The broad-based networker has pushed off rivals like Intel (INTC:Nasdaq) to claim a dominant share of lower-end businesses such as modems and adapter cards. It has increased gross margins, and for added insurance 3Com is rolling out an ambitious suite of higher-margin products. Analysts evaluating the worst-case scenario see short-term pain, and a sunnier long-term horizon as 3Com continues to benefit from heavy capital spending on networking infrastructure. Moreover, fresh data from market researchers indicate that 3Com has held its ground despite onslaughts from competitors like Ascend (ASND:Nasdaq) and Cisco. Ascend, which is losing grip on its market share, stands in greater danger of falling victim to industry leader Cisco than 3Com does. Significantly, the Street has not tempered its positive ratings on 3Com. Since August the First Call consensus rating on 3Com has remained 1.8 or 1.7 -- mildly bullish compared with the 2.2 average for all stocks. (The rating system spans from 1, strong buy, to 5, sell.) Now it sits at 1.8. "They still like the stock, obviously," says First Call research director Chuck Hill. First Call's rating on Ascend stands at 2.4, bearish compared with the 2.2 average. Many pros are disgruntled with Ascend management, which made stridently bullish predictions last summer. With 3Com, analysts are mostly concerned with the duration of its short-term suffering. In two short weeks they have chopped the First Call estimate 17% to 44 cents per share for the current quarter. Because the pros disagree about how much 3Com will slow business to cure its inventory ills, their numbers range broadly from 9 cents to 53 cents per share. 3Com is unlikely to shed too much light on the confusion. The company has said it is still reconciling disparate accounting standards resulting from the USRX merger but should have a uniform standard by January. Analyst John Duffy at Fahnestock upgraded 3Com from hold to buy on Friday because he thinks investors have beaten the shares excessively. "Clearly it's a survivor," Duffy says. While 3Com draws revenue from a broad base of products, Duffy considers Ascend a risky play given its heavy reliance on a single remote-access technology. Duffy does not cover Ascend; his firm has performed no underwriting for either stock. Another longer-term plus for 3Com: USRX's viable technology has afforded 3Com an immediate edge over Ascend in the Internet access business. According to data released by market tracker In-Stat on Tuesday, 3Com claimed a 38.6% share of "remote-access concentrator" sales in the third quarter. Ascend, which formerly proclaimed its dominance in the category, dipped from the prior period to 32.4%, while Cisco climbed to a menacing 17.2% share. Softened international markets and confusion over 56-kilobit solutions damaged the whole industry in the third quarter. In another category, 3Com did not grow as rapidly as market leader Cisco. Its sales of hubs and switches for local-area networks, or LANs, grew 6% from the prior quarter, according to numbers released Friday by the Dell'Oro Group research firm. Cisco chugged ahead 27%. However, analyst Farrokh Billimoria at Hambrecht & Quist doesn't think 3Com is in trouble here. He says Cisco gained a temporary advantage by shipping its new Catalyst 5500 product line earlier this year. Billimoria, who rates 3Com stock a buy, does not believe 3Com's inventory troubles will damage its market share. His firm has no performed no underwriting for 3Com or Cisco. Indeed, 3Com is now launching its own LAN switches, and might regain the advantage. A crucial spoke in that product cycle is the high-capacity CoreBuilder 9000 switch, whose models are due to ship in April and June 1998. Another way 3Com may regain ground against Cisco: On Monday it unveiled a joint marketing deal with MCI (MCIC:Nasdaq) involving such products as SuperStack II and OfficeConnect hubs. A 3Com official could not be reached to comment on the deal. To be sure, the short-term outlook ain't hot -- as TheStreet.com has reported, 3Com Chief Executive Eric Benhamou is under serious pressure to execute his planned high-end product transition while trying to cure the company's low-end inventory ills. Meanwhile Intel is exerting pressure with its PC adapter cards where it can.

To: Bruce L who wrote (10783)	11/25/1997 3:02:00 PM
From: Glenn D. Rudolph	Respond to of 45548

Contray to what some have suggested the tone of trading IMO seems firm. However I don't things will get carried away so I am offering out covered Dec 40 calls I am sure some market maker would love to buy them:-) Glenn

To: Bruce L who wrote (10783)	11/25/1997 3:04:00 PM
From: Rock	Read Replies (2) \| Respond to of 45548

Hope Craig is reading this - COMS is up 1 1/4 now... Top Stories: 3Com Battles to Recover from Recent Travails By Kevin Petrie Staff Reporter 11/25/97 12:16 PM ET 3Com (COMS:Nasdaq) has struggled to regain its footing after getting clocked by investors this summer. Will it be able to do so? The struggling networker's swift fall from grace is reminiscent of the Shiva (SHVA:Nasdaq) debacle. Once the hottest of Internet plays, Shiva took only one full Internet generation (since June 1996) to skid from 85 to 9. Previously ballyhooed, the company is now fighting to survive. Is 3Com going the way of Shiva? Since Oct. 8 the stock has lost 39.8%, ending down 1 7/16 at 33 9/16 on Monday. The company now trades at 29.2 times trailing earnings, pretty modest compared with industry leader Cisco's (CSCO:Nasdaq) 47.8 price-to-earnings multiple. Investors are smacking 3Com for the bloated inventories in its acquired U.S. Robotics unit. But most investors do not believe 3Com is another Shiva. Shiva, the classic case of a networker gone wrong, crashed because an unanticipated market shift ushered in the larger competition and left its single low-end technology out in the cold. No doubt 3Com is struggling, but the company has not cornered itself in a Shiva-like fashion. The broad-based networker has pushed off rivals like Intel (INTC:Nasdaq) to claim a dominant share of lower-end businesses such as modems and adapter cards. It has increased gross margins, and for added insurance 3Com is rolling out an ambitious suite of higher-margin products. Analysts evaluating the worst-case scenario see short-term pain, and a sunnier long-term horizon as 3Com continues to benefit from heavy capital spending on networking infrastructure. Moreover, fresh data from market researchers indicate that 3Com has held its ground despite onslaughts from competitors like Ascend (ASND:Nasdaq) and Cisco. Ascend, which is losing grip on its market share, stands in greater danger of falling victim to industry leader Cisco than 3Com does. Significantly, the Street has not tempered its positive ratings on 3Com. Since August the First Call consensus rating on 3Com has remained 1.8 or 1.7 -- mildly bullish compared with the 2.2 average for all stocks. (The rating system spans from 1, strong buy, to 5, sell.) Now it sits at 1.8. "They still like the stock, obviously," says First Call research director Chuck Hill. First Call's rating on Ascend stands at 2.4, bearish compared with the 2.2 average. Many pros are disgruntled with Ascend management, which made stridently bullish predictions last summer. With 3Com, analysts are mostly concerned with the duration of its short-term suffering. In two short weeks they have chopped the First Call estimate 17% to 44 cents per share for the current quarter. Because the pros disagree about how much 3Com will slow business to cure its inventory ills, their numbers range broadly from 9 cents to 53 cents per share. 3Com is unlikely to shed too much light on the confusion. The company has said it is still reconciling disparate accounting standards resulting from the USRX merger but should have a uniform standard by January. Analyst John Duffy at Fahnestock upgraded 3Com from hold to buy on Friday because he thinks investors have beaten the shares excessively. "Clearly it's a survivor," Duffy says. While 3Com draws revenue from a broad base of products, Duffy considers Ascend a risky play given its heavy reliance on a single remote-access technology. Duffy does not cover Ascend; his firm has performed no underwriting for either stock. Another longer-term plus for 3Com: USRX's viable technology has afforded 3Com an immediate edge over Ascend in the Internet access business. According to data released by market tracker In-Stat on Tuesday, 3Com claimed a 38.6% share of "remote-access concentrator" sales in the third quarter. Ascend, which formerly proclaimed its dominance in the category, dipped from the prior period to 32.4%, while Cisco climbed to a menacing 17.2% share. Softened international markets and confusion over 56-kilobit solutions damaged the whole industry in the third quarter. In another category, 3Com did not grow as rapidly as market leader Cisco. Its sales of hubs and switches for local-area networks, or LANs, grew 6% from the prior quarter, according to numbers released Friday by the Dell'Oro Group research firm. Cisco chugged ahead 27%. However, analyst Farrokh Billimoria at Hambrecht & Quist doesn't think 3Com is in trouble here. He says Cisco gained a temporary advantage by shipping its new Catalyst 5500 product line earlier this year. Billimoria, who rates 3Com stock a buy, does not believe 3Com's inventory troubles will damage its market share. His firm has no performed no underwriting for 3Com or Cisco. Indeed, 3Com is now launching its own LAN switches, and might regain the advantage. A crucial spoke in that product cycle is the high-capacity CoreBuilder 9000 switch, whose models are due to ship in April and June 1998. Another way 3Com may regain ground against Cisco: On Monday it unveiled a joint marketing deal with MCI (MCIC:Nasdaq) involving such products as SuperStack II and OfficeConnect hubs. A 3Com official could not be reached to comment on the deal. To be sure, the short-term outlook ain't hot -- as TheStreet.com has reported, 3Com Chief Executive Eric Benhamou is under serious pressure to execute his planned high-end product transition while trying to cure the company's low-end inventory ills. Meanwhile Intel is exerting pressure with its PC adapter cards where it can.