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

To: joe who wrote (19022)	7/12/1998 2:19:00 PM
From: blankmind	Respond to of 45548

oldie but goodie - on why this q will be better: 3Com offers choice of ATM or Gigabit Ethernet By Jodi Cohen Network World, 6/16/97 Santa Clara, Calif. - With its new autosensing 10M/100M bit/sec Ethernet switch, 3Com Corp. is not taking sides on the ATM vs. Gigabit Ethernet battle. The internetwork vendor last week rolled out its first dual-speed Ethernet stackable switch, which offers high-speed uplink modules for ATM or Gigabit Ethernet backbone connections. 3Com may be a bit late to the party, with Bay Networks, Inc., Cisco Systems, Inc., Cabletron Systems, Inc. and NBase Communications already delivering switches that can autonegotiate between 10M and 100M bit/sec speeds in half- or full-duplex mode. But only 3Com's new SuperStack II Switch 3000 10/100 device provides migration options to ATM and Gigabit Ethernet, analysts said. ''3Com is doing a really smart thing by telling customers that they can buy this SuperStack box now - even if they're running at just 10/100 speeds - and when they want to move to Gigabit Ethernet later, it's no problem,'' said John Armstrong, principal network analyst at Dataquest, Inc. in San Jose, Calif. ''I don't know of any other vendor that's offering that.'' Armstrong said the box's biggest benefit is that ''it's a safe buy'' for customers not quite sure which high-speed LAN technology they will choose, but who will likely need to upgrade to ATM or Gigabit Ethernet in the future. The 12-port SuperStack II Switch 3000 10/100 can provide Ethernet or Fast Ethernet links to desktops or aggregate 10M/ 100M bit/sec workgroup connections to 1G bit/sec switches at the network core. The devices can be stacked up to eight units high. The switch builds on 3Com's family of stackables, including the 24-port Switch 1000 Ethernet switch and eight-port Switch 3000 TX 100M bit/sec Ethernet switch. 3Com's new switch supports more than 8,000 media access control addresses and provides broadcast traffic control, virtual LAN support and Remote Monitoring on every port. In addition, the switch supports 3Com's TranscendWare software, which allows users to manage the device by defining policies, said Charles Gallagher, Fast Ethernet workgroup switch product-line manager at 3Com. 3Com: (408) 764-5000

To: joe who wrote (19022)	7/12/1998 2:23:00 PM
From: blankmind	Respond to of 45548

can we return usrx? Keeping current with Fred McClimans I fought the law and the lawyers won Network World 9/8/97 Don't you just love happy endings? Like in "Rocky" (the first one). Or "Field of Dreams." Or even "It's A Wonderful Life." But what about when the ending isn't quite so happy? Like in "Alien." Sure, Sigourney Weaver kills the beast. But it's hard to feel happy when you know she'll only end up drifting in space for fifty years while the film crew thinks of some way to bring the damned alien back in the all-too-inevitable sequel. With that in mind, let me present the following tale for tired network managers everywhere who glance askew with worried looks whenever another lawsuit appears involving their friendly vendor. ... Click for fairy-tale music to set the mood "Once upon a time there was a lawyer. He had a good job, but alwayswanted just a bit more in life. One day he met an investor who also had a good job, but also wanted just a bit more in life. Unfortunately for the investor, the stock he had purchased for more than $100 a share had recently fallen to the 60's as a result of increased competition and understandable market fluctuations (and a slightly over-inflated price to begin with). To make matters worse, another big company came along and bought his company for a premium above the current price - but well below the price the investor originally paid. At this point in the story, a light goes on above the lawyer's head[ding]. "Hey," the lawyer cries, "I think I might be able to help you outon this one." And he did..." Now I'm going to end the story there, because I think we all know wherethis is going. The lawyer sues the companies involved, proves that theyacted with disregard for shareholder rights, and gets the client a nicesettlement. But what if the ending is different, as in the recent case of 3Com and U.S. Robotics? As in our fairy tale, U.S. Robotics agreed to be acquired by 3Com for aprice per share that was just a tad (give or take a few dozen) pointsbelow its 52-week high. A number of investors feltthat the price per share paid by 3Com should have been either much higher or not have taken place at all. However, unlike in the story, the lawyers didn't win this one - or did they? It now looks like this case will be settled out of court after a formal settlement hearing next month. Among the original charges (paraphrased to remove the legalese): The stock swap of 1 USR share for 1.75 3Com shares undervalued USR; the merger failed to protect USR stockholders against a decline in 3Com stock; USR executives failed to disclose recent record earnings or find somebody willing to pay more for the company (and that, in any case, some poison pills made the company unattractive); and that some directors had a conflict of interest because the deal would accelerate the vesting of some of their stock options. Now for the happy ending. All of these allegations are about to bedropped. After extensive legal and financial investigation, thelitigious investors have apparently concluded that (again, legaleseremoved for brevity): They now fully understand the negotiation process of the original deal much better; The merger resulted in control of the merged company being in the hands of the free market shareholders - thus giving the market a say in the future of the company; Nobody else actually showed any interest in outbidding 3Com (unlike the 3Com acquisition of Chipcom a few years back in which Cabletron made a bit of noise - and profit - by purchasing a block of Chipcom stock); The price of 3Com (and now U.S. Robotics) stock has since risen significantly; There's a chance they would lose their case. This is good news for both the companies involved as this was, andcontinues to be, a very smart merger. And investors in both originalfirms have seen their shareholder values increase overall since theoriginal announcement. Now, about those formal settlement terms. Just what did the suin' stockholders wrangle out of 3Com? First, they got U.S. Robotics to mail out copies of its secondquarter 10-Q and a few other related documents. Second, they got.... um, that would be, well, nothing. That's it. Just a mailing. What more could they want? The ultimate reward was the increase in shareholder value they received through the merger. Less, of course, the legal fees - both the costs of their internal lawyers and the $500,000 the company has agreed to pay the shareholders' lawyers. That's right - the attorneys representing the shareholders in a suit settled out of court. The shareholders get a 10-Q, the attorneys get $500,000 (at the expense of all shareholders who will share the bill equally after it is paid from 3Com's checking account). This sort of thing seems to happen almost every time a merger is announced these days. A suit is brought, then dropped and only the attorneys get anything out of it all. I'm not against attorneys making money in a system that encourages this sort of behavior. It just feels a bit uncomfortable - especially for all the network managers who were already having enough troubles dealing with the implications of the proposed merger. Yes, occasionally a proposed merger actually gets derailed. But the vast majority of mergers are put together by by corporate directors with the same interests as the shareholders - maximizing shareholder profits - and thus are reasonably sound deals. In the case of 3Com and U.S. Robotics, now that the legal wrangling is out of the way, users should start to ask the tougher questions about technology: What about the low-budget licensing strategy for x2 56K modem technology (a good thing for users) and why won't we likely see an integrated 3Com/U.S. Robotics management tool until the end of 1998 (not a good move)? Now if you happen to be a shareholder of 3Com (U.S. Robotics) stock, and you object to the payment of $500,000 to a group of attorneysrepresenting some of your brethren, and you think that they should getpaid by the shareholders who initiated the suit, you can object in person in October, in Delaware, at the hearing. But my guess is that the the outcome wouldn't be any different, except that you'd now be paying for an airline ticket in addition to the $500,000 for somebody else's attorney.

To: joe who wrote (19022)	7/12/1998 2:27:00 PM
From: blankmind	Respond to of 45548

why coms will do well - another success story. Fujitsu looks to Layer 3 switches for speed, backup By Jim Duffy Network World, 7/6/98 Richardson, Texas - Expanding operations and a desire to boost network performance and distribute routing functions prompted Fujitsu Network Communications, Inc. to install a switched Layer 3 network. The maker of telecommunications equipment is adding new buildings to its campus research-and-development network here, and in doing so will have more users and offices to interconnect. So Fujitsu is replacing a Bay Networks, Inc. Backbone Concentrator Node (BCN) router at the center of its network with redundant CoreBuilder 3500 Layer 3 switches from 3Com Corp. Fujitsu's BCN router is now providing WAN access for the Fujitsu campus. Dept. of redundancy dept. The main focus of Fujitsu's new campus environment is redundancy. Each of the wiring closets in the four buildings features dual-homed 3Com CoreBuilder 3500 switches and SuperStack II Switch 1100 workgroup switches for redundancy. "We had one router that was the core of our network, and everything went through that core," said Lance Shinall, Fujitsu project manager and senior manager of information technology. "I was looking to disperse that and get something else in the core while we were putting in our new building." Fujitsu installed a redundant Fast Ethernet network, comprised of 20 CoreBuilder 3500s in the network core, in building equipment rooms and in wiring closets. The company also installed 48 SuperStack II Switch 1100s on building floors. The network was implemented in two months for less than $500,000, Shinall said. It supports CAD/CAM applications used to develop ATM, Synch-ronous Optical Network (SONET) and network management products. SAP R/3 and e-mail applications are also running on the network. Eight hundred Fujitsu staffers currently use the new network, but the company will add 1,000 more over the next few years. Currently the most mission-critical applications on the network are e-mail and SAP R/3, Shinall said. The company chose to go with Layer 3 switching to control traffic flow and avoid latency. Previously, the company connected Bay System 5000 hubs in each building wiring closet to the BCN router in the core. But as more buildings were added to the campus net, Fujitsu decided to experiment with the latest in routing and switching technology rather than buy more BCNs, company officials said. The BCN slowed transmissions by 1 to 5 msec, Fujitsu officials said. The Layer 3 switches forward packets at wire speed, which they said eliminates latency. Also, Layer 3 forwarding at the edges of the Fujitsu network helps control traffic flow. The switches do this by handling routing locally, which helps contain broadcast traffic. Previously, all traffic had to go through the BCN router in the core of the network. But the CoreBuilder 3500s in the wiring closets learn the routes from Address Resolution Protocol (ARP) tables instead of performing IP lookups on each packet. ARP "snooping" can also be done at wire speed, which makes it practical to employ Layer 3 routing at the edge, Fujitsu officials said. Another factor in selecting Layer 3 switches was capacity. Even with up to 5 msec of latency, Fujitsu was satisfied with the BCN's performance; but the company had filled up every BCN port. "Even with all of our 100M bit/sec links we did not see a performance problem," Shinall said. "However, we were maxed out on slots. We couldn't put anymore in; we used every port."

To: joe who wrote (19022)	7/12/1998 5:16:00 PM
From: Bruce L	Read Replies (3) \| Respond to of 45548

Joe: Several days ago, you said something that's resonated with me ever since: words to the effect that the market will reward COMS' new solid,consistent earnings growth once it perceives that it will be solid, consistent and growing. Nothing earthshattering about this, I suppose; an investment truism. But in today's context, I think you've identified the primary reason your goal of $100 per share may be realized. We all know the market values consistent, predictable growth. KO is the penultimate example: a PE of 53 based on a meager annual growth of maybe 10%, but growth that has been consistent from before the last ice age. DELL, a simple "commodity" assembler of component parts, has a PE of around 63, and yes, they haven't had a warning in about 2 1/2 years. DuPont still has a PE of about 36 and it warned just this week that its future earnings are going to be flat; same with Hershey. And analysts are furiously revising downward the earnings estimates for the S&P500. SE Asia and all that. In the last several weeks a great deal of information has been posted on this thread that - taken together - strongly supports the conclusion that COMS will be having strong, consistent earnings at a time when maybe few other companies will. This is fundamental analysis - something I've never tried before - but, hey, I'm just snythesizing from what you guys have posted before. Here goes: 1. At the last CC, Terry B said that they had "nailed" the channel inventory problem. They have implemented new accounting procedures that are more rigorous than any in the industry that will eliminate surprises. They took a sales hit in the last quarter to do it. The announced purpose of these changes was to make earnings in the future more CONSISTENT. 2. At the same CC Terry B said (as I recall) that NEW products developed just in the last one year represented 40% of total sales in the quarter. He said that the company has received more new patents in the last year than ever before in its history; more also than any of its competitors. This is evidence, folks, of a growing company, a company that is not going to have to worry about shrinking margins. <Some of you may quibble with the way the 40% figure was calculated. It probably does include new versions of old products, e.g., the new Palm Pilot vs the old or the CoreBuilder 9000 vs the 3000 whatever, but since the new versions carry higher margins (presumably) it's still impressive.> 3. NIC Cards: Analyst Donna Dubinsky says that the market for these cards is growing 20-25% per year that it is evolving into a "duopoly" shared between COMS and XIRC. (Remember the spring of 1997 when COMS tanked on fears that mighty Intel was invading this market only for people to discover that COMS, presumably because of its expertise, was gaining market share!) Dubinsky calls COMS "tremendously undervalued." 4. PALM PILOT: Walter Mossberg of the WSJ said last week that the Palm Pilot "has some new rival, but no competition." Someone said this is COMS' 'ace up their sleeve.' They've sold some 2 million and the market which they control roughly two thirds of (the other third being split between a dozen other makers using the Microsoft operating system. IBM makes its own version of the Pilot under license from COMS. (I don't know whether IBM's are counted in the above 2 mil or not.) Until now, most sales have been to individuals who use them as pocket planners etc. and have developed a cult-like loyalty to the Pilot. However, in the future, due to new capabilities of the Pilot(e.g., BlueTooth), sales are going to fueled by enterprises. Thousands of software engineers and companies, including the former inventor/developers of the Pilot are creating new software applications for it that will make it all but impossible for competitors to overtake Pilot's lead. 5. SWITCHES AND SYSTEM PRODUCTS: At the CC it was said that sales of these products increased 22% sequentially quarter to quarter. This area includes Gigabit Ethernet, CoreBuilder and SuperStack switch products. Anecdotally, we've heard COMS is selling all it can ship and can't keep up with demand. As Joe posted today, Lucent bought a company making Lanswitches because Lucent feels the market is growing 20% per year. 6. MODEMS: The rap is that this is a "commodity" product whatever that means; low margins, I guess. However, no one in a long time has dared to deny that COMS made the best modems around and that it is the market leader. GE makes refrigerators etc, commodities all, and it' OK with Jack Walsh as long as they're #1 or 2 in the market. Alright, enough rambling; I hope I made some sense.