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

To: Mang Cheng who wrote (12150)	12/12/1997 1:32:00 AM
From: Dwight E. Karlsen	Read Replies (1) \| Respond to of 45548

Mang, re People had discounted to the point of assuming that no Standard would come out next year due to all the in-fightings and lawsuits. I never heard anyone say that, neither did I ever read anything of that sort, but if true, then people really do assume the unthinkable. I always figured that at worst, a standard would be hammered out in Jan., in negotiations in the days prior to the actual meeting. So I think that the biggest reason COMS/ROK decided to come to an agreement right now, was probably strictly for the PR benefit - to try to get people excited about 56K modems again. I for one have had a USR 56K modem since the first of June - But thanks to US West, my ISP has been unable to get a local access # to support 56K for this ISP. There has been one local x2 vendor in my area offering x2 since June, but they charged double what normal pricing is ($40/mo vs $20/mo). US West is simply the worst phone company imaginable for getting new physical lines in. At any rate, after waiting for x2 access since the modems became available in April, and after being told by my ISP that it would be available in June, and after not getting x2 access still, I seriously no longer care - If I get it, fine, if not, no big deal. 28.8 isn't all that bad, and at least with my current ISP I never get a busy signal, and I only get disconnects if I'm idle for 15-20 min or so. DK

To: Mang Cheng who wrote (12150)	12/12/1997 4:12:00 AM
From: craig crawford	Respond to of 45548

<< The ITU standard is actually very important. COMS dropped from $58 to $28 almost totally due to the modem mess and if the mess looks like getting over, then it's indeed quite bullish. >> I totally disagree with this statement. There is no way I shorted this stock just because of some modem bickering. COMS has many more serious issues to deal with other than the 56K war. 1) Pricing power. RAC revenues declined sequentially for the first time ever last quarter. True, ports were up but prices dropped so fast that revenues were slightly down. Prices have dropped by more than 50% in the last year. This is a significant part of COMS business. Prices are falling in all areas of COMS business. I challenge anyone to show me a significant piece (at least 5%) of COMS business where margins are improving. (And I'm not referring to a mild bounce back from lower levels. I'm talking about the overall general trend). 2) Asian woes. Like I said a few weeks ago when everybody thought we were done with Asia, it's not going away that easy. The problems in this part of the world will take years to recover not months. Furthermore I see them spreading to places like China, Europe, Latin America. We are already seeing the effects on US corporations. Boeing, Microsoft, Oracle, Wireless, Chips, Networkers, Software, Banks, you name it. The simple fact is COMS has the most asian exposure out of all the networkers. No more 50% growth from this region. The way things are shaping up I wouldn't be surprised to see pockets of DECLINES in revenues from this region. 3) NIC's. True demand is growing at a healthy clip and unit shipments are up, but prices have dropped at a fast clip in this market as well. INTC cut prices 40% earlier this year. Will they do it again? Does everyone remember what happened the last time they cut prices? 4) Consumer modems. Never were any great margins in this area and it is only getting worse. I find it funny that COMS wants to blame it's slow modem sales on standards hold-ups yet Rockwell hasn't been complaining. They said they are shipping K56flex chipsets out the door in record numbers. The simple fact is x2 was the early leader due to ROK and ASND's problems. That lead has evaporated and now K56flex is in the lead. The latest Dell'Oro numbers are out of date. Let's see what next quarters numbers look like. 5) Y2K isues. Laugh all you want and call it a hoax, but it will slow networking spending even if only to a minor degree. 6) Competitive issues. INTC, CPQ, LU, NT, etc. all want into the markets that COMS serves. Lucent just made another data-networking acquisition (Prominet) which may look marginal now but will pose yet another threat to COMS. More than anything it shows that Lucent is getting serious about networking. It's getting more and more crowded. 7) Accounting issues. IMO This company has used downright misleading accounting to try to hide fundamental problems with the business. Analysts are going to be watching COMS like a hawk and they won't be able to get away with anything. Every section of COMS books will be scrutinized for signs of weakness. To be continued... (I'm tired)