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

To: Moonray who wrote (21738)	9/21/1998 4:33:00 PM
From: Mang Cheng	Respond to of 45548

"Cabletron, 3Com Up On Hopes For In-Line Earnings Reports" Dow Jones Newswires -- September 21, 1998 By Joelle Tessler NEW YORK (Dow Jones)--Shares of Cabletron Systems Inc. (CS) and 3Com Corp. (COMS) were up in a sharply lower market Monday on anticipation that the two data networking companies will meet Wall Street estimates when they report their quarterly results early this week. Both Cabletron and 3Com have quarters that end in August and are therefore the first of the networking equipment makers to report their quarterly numbers. Investors are relieved that neither has issued disappointing earnings outlooks for the period, analysts said, since both have been coping with a number of company-specific troubles over the past year. "With Cabletron, there is a general sentiment that they probably made the quarter," said Lazard Freres & Co. analyst Michael Duran. "And 3Com was probably able to meet conservative estimates." Cabletron plans to report its fiscal second-quarter results after the market closes Monday. The consensus estimate is for earnings of 8 cents a share, compared with 37 cents year ago. The company has been coping with pricing pressure, a heavy concentration of older products like intelligent hubs, and a sizable presence in shared media - which is rapidly being replaced by switched technology in the networking industry. It also has limited penetration in the carrier and low-end enterprise markets and has been slow in building up a distribution network. Still, Nutmeg Securities analyst Andy Schopick believes Cabletron's problems bottomed in the fourth and first quarters. The company, he said, is reaching a turning point and should be starting down "a modest recovery path." 3Com, meanwhile, plans to report its fiscal first-quarter results after Tuesday's market close. The consensus estimate is for earnings of 20 cents a share, compared with a restated net loss of 15 cents a year earlier. 3Com told analysts in June that revenue in its first quarter would be flat to slightly up sequentially due largely to seasonal weakness, which tends to be particularly strong in Europe. But Sanford C. Bernstein & Co. analyst Paul Sagawa believes 3Com's revenue will actually be up sequentially, rising somewhere in the mid-single-digit percentage range. "Things look good for them to meet or even beat estimates," he said. Analysts will be keeping a close eye on 3Com's inventory levels since the company was plagued earlier in the year by bloated inventories in the distribution channel. 3Com did slow shipments to distributors to address the problem and has assured analysts that it had brought its inventory levels down in line with lower targets. Analysts will also watch sales of 3Com's v.90 modems, which are based on the new 56K modem standard set in February. Many are concerned that sales of the new modems have not been as robust as hoped. Cabletron's NYSE-listed shares were recently up 3/8, or 3.7%, at 10 5/8 on volume of 1.1 million, compared with average daily volume of 1 million. And 3Com was up 1 5/16, or 4.3%, at 31 11/16 on Nasdaq volume of 6 million, compared with a daily average of 7.8 million. 3Com's shares have been on a roller coaster ride in recent months as unconfirmed rumors periodically surface that Intel Corp. (INTC) will make a bid for the company. Shares of another networking company often named as a likely takeover target, Ascend Communications Inc. (ASND), were also higher Monday. Sanford Bernstein's Sagawa said the stock is likely up on "continued reverberations" from last week's Lucent Technologies Inc. (LU) analysts' meeting. Many on Wall Street see Lucent as a likely candidate to buy Ascend, though both companies have repeatedly declined to comment on this talk. Lucent made clear last week that it intends to be a leader in the data networking market as well the telecommunications equipment market - leading some analysts to conclude that it is indeed eyeing Ascend. "The stock is in control of the speculators," Sagawa said. "It is moving irrespective of the underlying fundamentals." The fundamentals, however, look good on their own, analysts agree. CIBC Oppenheimer analyst Martin Pyykkonen said Ascend is benefiting from sales to a wide range of telecommunications carriers that are building out the infrastructure of the Internet. Sagawa noted that the carrier market is less "dicey" than the enterprise - that is, corporate - market for networking equipment. Many corporate customers - particularly financial services companies, which account for more than 20% of the enterprise market - could spend less on networking equipment as they cope with economic turmoil overseas and as they shift their information technology resources to deal with the Year 2000 problem, he said. Ascend's shares were recently up 2 1/16, or 4.4%, at 48 5/8 on Nasdaq volume of 3,382,500 compared with an average daily volume of 6,328,300. Mang