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

To: craig crawford who wrote (13312)	1/16/1998 4:07:00 AM
From: craig crawford	Read Replies (1) \| Respond to of 45548

Just some random notes to myself from the 10Q ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ The Company derives a portion of its sales from original equipment manufacture (OEM) partners including PC companies who bundle 3Com network interface cards and modems, and incorporate chip-sets into their products. The Company believes that future sales growth of these products is dependent, in part, on the Company's ability to strengthen relationships and increase business with OEM partners. OEM sales are characterized as having lower average selling prices and gross margins. Consequently, the Company's overall gross margin percentage may be adversely impacted if OEM sales become a larger percentage of the Company's business. Certain OEMs in the PC industry are integrating communication subsystems on the PC motherboard. If such integration becomes a trend, the Company's future sales growth may be adversely impacted. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Days sales outstanding in receivables decreased to 68 days at November 30, 1997, compared to 74 days at May 31, 1997 due to a lower concentration of sales in the third month of the quarter. Inventory levels at November 30, 1997 increased $226.6 million, of which $197.7 million was finished goods, from the prior fiscal year-end to $628.9 million. Inventory turnover was 5.0 turns at November 30, 1997, compared to 7.5 turns at May 31, 1997 primarily as a result of the increase in the Company's inventory due to reduced sales levels, as previously discussed. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ During the second quarter of fiscal 1998, sales in the Asia Pacific region compared to the second quarter of fiscal 1997 and the first quarter of fiscal 1998 decreased five percent and 32 percent, respectively. Historically, the Asia Pacific region had been a high growth region for the networking industry and the Company. During the second quarter of fiscal 1998, however, several Asian countries experienced a weakening of their local currencies and turmoil in their financial markets and institutions, which the Company believes adversely affected financial results for the second quarter of fiscal 1998. An additional factor affecting second quarter results was an apparent slowdown in the growth of the networking industry. Recent reports by industry sources indicated that the networking industry worldwide grew by less than 20 percent during 1997, well below historical growth rates.