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

To: Mr. E2u who wrote (18551)	7/1/1998 12:18:00 PM
From: jim bender	Read Replies (1) \| Respond to of 45548

From WSJ: 3Com Says New Products Are Key To FY99 Growth By MARK BOSLET Dow Jones Newswires PALO ALTO, Calif., -- A new product cycle that 3Com Corp. (COMS) describes as its largest ever will be the catalyst for growth in fiscal 1999, company executives said. As it is, the company said during a meeting with analysts, products introduced over the prior nine months accounted for 39% of corporate sales in the fourth quarter of fiscal 1998, which ended in May. "This illustrates the strength of our new product cycle," said Ron Sege, senior vice president of enterprise systems. 3Com struggled during fiscal 1998, straining to integrate its purchase of U.S. Robotics Corp. and to control bloated inventories in its distribution channel. Fourth-quarter earnings released last week, however, showed rebounding sales and moderated inventories, giving Wall Street new confidence in the company's prospects. At Tuesday's meeting, 3Com expressed hope that it could build on that momentum. The company is "convinced that '99 will be a far more rewarding year" for employees and investors, Chief Executive Eric Benhamou said. During fiscal year 1999, 3Com will work to keep its inventories under control and to make step-by-step progress toward raising its gross margin to between 45.5% and 47.5%, said Chief Financial Officer Chris Paisley. The fourth-quarter gross margin was 43.5%. The gross margin should increase relatively quickly, Paisley said. The company also is focused on continuing to reduce the amount of inventory it carries in-house, he said. Meanwhile, 3Com will continue to use selective price cuts to stimulate modem sales, said Doug Spreng, senior vice president of client access products. In June, 3Com cut modem prices in the North American market by 20%. Spreng indicated the company is now analyzing the impact of those cuts, abd considering a similar move in Europe in coming months. Also in store for fiscal 1999 is the introduction of a new generation of the Total Control HiPer Access System, the company's offering for the remote-access market. The product should come out in the second quarter, said Ross Manire, senior vice president of carrier systems. Meanwhile, 3Com is keeping an eye on its competitors: The moment is right to capitalize on the struggles of such companies as Bay Networks Inc. (BAY) and Cabletron Systems Inc. (CS), Sege said. And, he added, "it is not appropriate to think of Cisco (Systems Inc. (CSCO)) as this gorilla" that no one comes close to. -By Mark Boslet; 650 496-1366