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

To: hitesh puri who wrote (20447)	8/12/1998 12:54:00 PM
From: joe	Read Replies (1) \| Respond to of 45548

hitesh, what have you been feeding this dog<gg>? Must be some hi-test Purina Supreme. joe PS 29 1/4 whew!!

To: hitesh puri who wrote (20447)	8/12/1998 12:59:00 PM
From: joe	Read Replies (1) \| Respond to of 45548

Interview by Eric B. Great article (IMO) techweb.com (for knuckle heads who think COMS is just a commodity company, go to the bottom.) July 27, 1998, Issue: 725 Section: Interview The InternetWeek Interview -- Eric Benhamou, chairman and CEO of 3Com Megamergers, such as the pending union of Northern Telecom with Bay Networks, are sending shock waves across boardrooms. But 3Com CEO Eric Benhamou is staying calm despite the storm. The problems with managing channel inventories following 3Com's acquisition of U.S. Robotics is behind him now, Benhamou said in an interview with InternetWeek executive industry editor Saroja Girishankar and senior editor Jeff Caruso. Benhamou's new mandate calls for incorporating more intelligence, security and management capabilities across all 3Com product lines; acquiring a half-dozen companies to get those technologies; expanding and managing the vast reseller channel with better inventory management; and continuing its electronic-commerce initiatives. InternetWeek: 3Com has acquired several companies. Did they produce anticipated products? Benhamou: In the main they have. The Chipcom acquisition strengthened our presence in the core of the network, and the development of the CoreBuilder 9000 family of switches is a direct result of that. Likewise, the PathBuilder line, which integrates voice, video and data, is not something that 3Com knew how to do before our acquisition of OnStream (previously known as T3 Plus). The U.S. Robotics acquisition, which is our biggest so far, allowed us to integrate WAN access capability into our product portfolio while also giving us the ability to manage a retail channel and get into the ISP market. InternetWeek: What would you have done differently? Benhamou: We could have handled some of the operational integrations better. We learned that it pays to invest in infra-structure consolidation as quickly as possible. One source of difficulty in the U.S. Robotics acquisition was the management of channel inventories. We didn't have a very good handle on the levels of inventory coming from U.S. Robotics because they were not collected in a consistent and thorough manner. But we have managed to reduce our channel inventory to the required levels. InternetWeek: Are you moving to a negligible inventory model like Dell Computer? Benhamou: There are no consistent ways to measure channel inventories, so we have created an entire business model to manage inventories across our 2,000 channel partners using [common] tools. We are able to generate reports that are reliable. This will help us manage our inventories across the nearly 5,000 channel partners we hope to have by the year 2000. Ultimately, the idea is to move to an inventory model much like Dell's, except that Dell deals directly with customers. We also are expanding our existing electronic-commerce activities over the Internet. InternetWeek: What technologies would you like to see 3Com move into either through internal development or through acquisitions? Benhamou: We need technologies that can be shared across our products for large enterprise, small-business, consumer and ISP/carrier areas. We need new ways of making all kinds of networks better through reliability levels of 99.999 percent. InternetWeek: How will you do that and in what time frame? Benhamou: A single innovation will not close that gap. It involves increasing reliability to the highest level, reducing network administration costs with zero-level administration, better handling of different traffic modes in real time and, finally, going to policy and intelligent management. This means improving the quality of network components. Zero administration requires more intelligence for active components. The bottom line is developing technologies that move from store-and-forward traffic to real-time traffic for voice and video, and going from a device management approach to the total management of the network. One example of that would be to manage a traffic stream with given latency characteristics for voice transmission or to manage the traffic stream in your given priority level for bandwidth or security. Every product division of the company will collaborate on these developments. We'll close the gap in a couple of years. InternetWeek: On the carrier side, what do you need? Benhamou: Our WAN access platform-Total Control-now handles data and voice over IP. It handles data, remote access concentration and modem functions. We also need voice digitization, codec capabilities and connectivity to SS7 networks. We'll develop some of these functions and license others. More immediately, you'll see fax over IP-which again will be based on a partnership. Our [existing] Siemens relationship will provide voice over IP developments for the carrier space. InternetWeek: How many acquisitions do you think you will you need to make? Benhamou: My guess is that we'll probably end up making a half-dozen acquisitions over the next year. We will focus on best-in-class technology that we want to integrate with our own products. I can't really say which ones they are, but they would all fit under the four major capabilities I mentioned. InternetWeek: Some analysts believe that 3Com needs to have high-end backbone switches to compete in the carrier and Internet service provider space. What's your view? Benhamou: That's not part of our business. In the public network, we stop at the outer edge. Many analysts look at the public network as one big blob and don't understand how to best compartmentalize it into one of the natural break points there. The kind of equipment that you build for the core of the public network is very, very different from the kind of equipment that you build for the edge. InternetWeek: Can you compete in the new networking field where megamergers, such as the pending deal between Northern Telecom and Bay Networks, are becoming the norm? Benhamou: We believe that the strategy of partnership we are pursuing is far better for us. It enables us to have meaningful relationships with telephone equipment vendors like Siemens and not become their direct competitors. In fact, Siemens and 3Com have jointly invested in a VDSL company in Israel. It's a different strategy from Cisco's. This does not mean that one is necessarily better than the other, but given our strengths, this is by far the best strategy for us. I don't know how Cisco is going to take on competitors like Siemens and Lucent. InternetWeek: Prices for both hubs and switches have fallen considerably and PCs are starting to have built-in network interface cards and modems. How will this commoditization affect 3Com? Benhamou: Just because a market segment is high volume, it does [not] make it commoditized. We differentiate on brand and will add intelligence and other capabilities, such as priority traffic and encryption.