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

To: Steve Porter who wrote (19411)	7/20/1998 1:01:00 PM
From: blankmind	Respond to of 45548

3Com's Secret Bombshell Exposed By Joseph C. Panettieri, Sm@rt Reseller Vendor to launch networking chip company to battle Intel and Asian financial crisis. In a landmark move, 3Com Corp. is preparing to launch a new corporation in a bid to lower its costs, defend against the Asian financial crisis, and compete even more effectively against Intel Corp. in the small-business networking market, Sm@rt Reseller has learned. 3Com's New Child > Name: Impacct, a maker of semiconductors for Ethernet switches, hubs and adapter cards > Value: $11 million initially, $50 million-or more by the year 2000 > Employees: At least 60 > Offices: U.S. and Taiwan > First Product Shipment: 1999 under the product name Coolwire > Partner: Accton Technologies Inc. The proposed company, to be named Impacct, will focus on delivering chips for Ethernet hardware beginning in 1999, according to an internal 3Com Business Development document viewed by Sm@rt Reseller. The document, dated July 2, 1998, states that 3Com wants Impacct to be profitable as soon as possible, with an initial public offering tentatively proposed for the year 2000 or 2001. 3Com could not be reached for comment as of press time, but a source close to 3Com confirms the document's authenticity. 3Com will launch Impacct with assistance from Asian networking giant Accton Technologies Inc. "Impacct [will be a] critical technology provider for both 3Com and Accton, and will need to preserve the strategic relationship with the two parent companies," the document states. 3Com will invest about $7.1 million to launch Impacct, with Accton chipping in about $1 million. Accton will offer additional financial assistance by giving Impacct access to Accton's U.S. business operations. 3Com and Accton will each hold a 35-percent stake in Impacct, with the remaining 30 percent reserved for an employee stock-option plan. 3Com has the option to acquire all of Impacct for up to $25 million in 1999 or up to $50 million in the year 2000, the documents state. Impacct will be positioned as a low-cost provider of VLSI (very large-scale integration) Ethernet components, a critical technology in 3Com's strategy to remain price-competitive against Intel in the small business networking market, resellers say. "3Com has fantastic adapter cards and switches, but they can't rest on their laurels because Intel is giving chase," says Art Brieva, a systems integrator at Intelligent Computer Solutions Inc. "It sounds like Impacct could help 3Com keep its costs in check." Impacct's hardware will be used in 3Com adapter cards, hubs and switches under the brand name Coolwire. The devices will be engineered and manufactured in Taiwan, with a design center in the U.S., as well. On the international front, 3Com could use Impacct to more effectively ride out the Asian financial crisis, according to a venture capitalist close to 3Com, who requested anonymity. Impacct will have three primary customers: 3Com, Accton and companies based in Asia. Those Asian customers represent 35 percent of the worldwide demand for semiconductors, the 3Com document states.