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

To: Moonray who wrote (11898)	12/8/1997 7:21:00 PM
From: jim bender	Read Replies (1) \| Respond to of 45548

Modem Makers Reach an Accord With New Compromise Standards By FREDERICK ROSE Staff Reporter of THE WALL STREET JOURNAL A bitter fight over conflicting technical standards for high-speed computer modems, pitting opposing groups led by 3Com Corp. and Rockwell International Corp., was tentatively resolved last week with the adoption of compromise standards. The decision by a working committee of the International Telecommunications Union, an arm of the United Nations, won't become final until a series of formal steps are taken that are expected to take many months. But for the dozens of companies involved in the year-long dispute, the preliminary agreement hammered out at an Orlando, Fla., hotel near Disney World removes a major roadblock for the latest generation of modems, which transmit through ordinary telephone lines at speeds known in computer jargon as 56K, or close to 56,000 data bits per second. As word of the technical resolution spread Friday, 3Com shares jumped $2.5625, or 7.6%, each to close at $36.4375. Volume was 14.2 million shares, making it one of the most actively traded issues on the Nasdaq Stock Market. Rockwell shares gained $1.1875 to close at $50.3125 in New York Stock Exchange composite trading. 3Com and its U.S. Robotics division, acquired early this year for $6 billion, have engaged in a public feud with Rockwell's semiconductor division over conflicting standards for this new generation of modems. At stake is a potential world-wide market of as many as 100 million of the mechanisms that connect computers through phone lines. With neither side giving way on the 56K battle, the computer world has been divided between incompatible transmission techniques: 3Com, the world's largest modem maker, called its "x2," and an alliance led by Rockwell, the world's largest maker of computer chips for modems made by others, called its "K56flex." As expected by industry insiders, the newly emerging international standard encompasses technical details from both transmission techniques. Each side claimed victory, noting that one part or another of the technology came from its camp. In fact, major contributions also came from Lucent Technologies Inc. and Motorola Inc. Moreover, the proposed new standard contains new technical capabilities that enable better communications over certain phone lines. "Everybody is a net winner in this one," said Ernest Raper, senior market analyst at VisionQuest 2000 Inc., a modem-market tracking concern based in Moorpark, Calif. Mr. Raper estimates that world-wide sales of silicon chipsets that are the core of modems will total between 28 million and 30 million next year -- double this year's sales. Emergence of a standard, moreover, likely will slow the descent of modem prices, which have plummeted as modem makers struggled to convince wary consumers to choose between competing, incompatible equipment. With the new standard, it is expected that most 56K modems made this year can be upgraded relatively simply through the insertion of new software. The prospective emergence of a standard "removes a major negative" for 3Com, said Paul Weinstein, an analyst at PaineWebber Inc. As it pushed its x2 technology, 3Com had flooded retail stores with modems. But slower-than-expected sales left inventory backed up on the shelves, and the company last week said it expected to report lower-than-anticipated profit and sales for the fiscal quarter ended Nov. 30. Anticipated growth in modem sales also should benefit Rockwell. Dwight Decker, president of Rockwell Semiconductor Systems, welcomed the truce, saying in an interview "this is the point where the dam has broken and everyone has decided that we can move ahead." The compromise was reached after a group of 25 modem makers, which didn't include either 3Com or Rockwell, reached consensus after a secret nonbinding vote.