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

To: The Vinman who wrote (14800)	3/24/1998 7:19:00 PM
From: Stockman_77079	Read Replies (1) \| Respond to of 45548

The problem with the inventory is there, it would not go away by itself. 3com is addressing it head on by reducing what gets out there and change its inventory model. To resolve these problems, there is going to be pain. It's whether you pay for it this quarter, or do u want it linger on in the future quarters. Sure money managers want to look at companies that make money, but they also look at companies which has greater earning/position potential next month/year. By implementing the new business model it did, 3com is in a good position to be a great earnings candidate. And this game is all about making bets on who is the king of the hill tomorrow, 3com at its depressed stock price is a bargain. To think that 3com is going to have a great earning this quarter with all those problems is simply not realistic.

To: The Vinman who wrote (14800)	3/24/1998 7:36:00 PM
From: David Lawrence	Respond to of 45548

>>>aren't companies in business to make money? Sure. Yet, Netscape, AOL, Yahoo, et al wind up with upteen billion dollar market capitalizations. That's capitalism hard at work!

To: The Vinman who wrote (14800)	3/24/1998 8:03:00 PM
From: Bura	Respond to of 45548

I think that once they realized they wouldn't make/beat their #s (at .14), they decided that it would be better to miss it by a lot and fix their inventory situation completely. It looks worse to miss by a cent or two (meaning your business was so bad you couldn't find a couple of extra cents worth) than to miss by a dime or so (people will then say the results don't mean anything due to the inventory thing). While this logic probably makes sound crazy, I think COMS could be up tomorrow. Most people have already discounted a bad Q (stock in the 30s, from 81) and might be even willing to overlook the fact that margins are under pressure. That being said, 3COM is entering a pivotal time. They run the risk of becoming another BAY (of old). When Bay was created, they were approx. the size of CSCO and the same type of arguments that were used to justify the merger of COMS/USR, were used for BAY (ie similar size to CSCO therefore able to battle with CSCO). Now, BAY is a quarter the size of CSCO in revenues. Look at COMS. In mid 97, they had sales only $100 mln less than CSCO. Now, CSCO has surpassed $2 bln per quarter while COMS is at $1.2 bln. Even, if COMS gets to its previous high ($1.6 bln) next Q, CSCO has already left it in the dust. Also, COMS is in lower margin products, so revenues are not even a good comparison. It is unfortunate that COMS CEO had delusions of grandeur. Remember the PR about how the merger was off to a great start (just two Qs ago and a strong product cycle was coming). Cisco CEO Chambers has said that he has a lot of respect for him. Wall Street doesn't after the earnings miss (March 97), the shoddy accounting issues re merger, and the inventory disaster. I hope that this thing does not turn into a BAY or a Corel but who knows? I think that COMS will probably have a good quarter or two (partly by saving some sales from this Q) but longer term, they could be in some trouble, although most of the damage has probably been done to the stock.