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

To: joe who wrote (22933)	10/19/1998 5:32:00 PM
From: David Lawrence	Respond to of 45548

No, not fudging - just misleading comments, in my opinion. If you were around when 56k was announced, you'd have thought Ascend invented it and had been shipping for months, when in fact is was many, many months later before they did start shipping. But, that's old news. Disclosure: Long COMS & ASND

To: joe who wrote (22933)	10/19/1998 5:52:00 PM
From: Immi	Read Replies (1) \| Respond to of 45548

October 19, 1998 Network-Gear Shares Rally, But Shiva Deal Damps 3Com By LISA BRANSTEN THE WALL STREET JOURNAL INTERACTIVE EDITION SAN FRANCISCO -- Amid a rally in networking-gear stocks Monday, news that chip giant Intel will acquire troubled data-networker Shiva helped put a damper on shares of 3Com. In afternoon trading on the Nasdaq Stock Market, shares of 3Com added 3/64 to 31 41/64, after trading in negative territory for part of the day. Industry leader Cisco Systems added 7/8 to 56 1/4, Ascend Communications climbed 15/16 to 47 7/8 and Tellabs added 2 15/16 to 47 7/8, all on Nasdaq. Beleaguered Ciena rose 2 13/16 to 12 1/8 on Nasdaq, after the chief executive of Tellabs made comments that some say suggested the companies might revive their failed merger. Meanwhile, the Nasdaq Composite Index gained 27.78 to 1648.73 and Morgan Stanley's high-tech 35 index was up 17.35 to 578.05. Analysts were divided about exactly why 3Com shares reacted negatively to the Intel acquisition. Shiva specializes in products that allow computer users to access office computers from home or on the road. Its products are targeted primarily at small businesses and home offices at the low end of the networking market, and 3Com is the strongest of the big data networking companies in that area. But there was disagreement over whether the deal represented a competitive threat to 3Com -- or simply killed hopes that Intel might acquire 3Com. Stephen Koffler, an analyst at Donaldson Lufkin Jenrette Securities Inc., said he thought 3Com's underperformance Monday was largely a psychological reaction, because it makes an Intel acquisition less likely. "The competitive threat in that area is zero," he said, because "the company that Intel has acquired is a very weak company." But Tim Luke, an analyst at Lehman Brothers Inc., said that while the move may not change the competitive landscape for 3Com very much, "it's not positive because it ... indicates that Intel is here to stay" in the data-networking market. To date, Intel hasn't been extremely successful in penetrating the networking market, said Christin Armacost, an analyst at Everen Securities Inc. "Intel has been extremely active in doing acquisitions at the low end of the market," she said, but it has yet to match 3Com's distribution of brand awareness in that area. In the past Intel has hurt 3Com's margins by sharply lowering prices on some data-networking products, but such moves haven't succeeded in taking much market share. Intel holds about 10% share in the small-business networking market to 3Com's 33%, she said. "It's more of a headache than a true long-term threat," she said. "3Com will probably have to pay a little bit more attention to what Intel is doing in the remote access space." Mark Christensen, vice president of Intel's network products, said that the company's networking division has annual sales of $500 million to $1 billion but that Craig Barrett, Intel's new chief executive, wants the company's networking business to grow at twice the industry rate, somewhere in the low teens. Elsewhere in the data-networking sector, stocks were higher on optimism that business trends in the sector might not be as bad a some analysts had feared. Such optimism came from the strong earnings posted on Thursday from Tellabs and hopes that Ascend would put out similarly good numbers Monday after the market closed. Also a host of product announcements coming from the industry trade show Networld+InterOp being held this week in Atlanta have renewed confidence in the sector. But some analysts think the optimism may be misplaced, given the global economic weakness that may slow down big corporations' expenditures on capital equipment such as networking systems. Chris Stix, an analyst at SG Cowen Securities Corp., said results may be good across the industry for the quarter just ended, but there may well be some slowing over the next two the three quarters. He recently cut Cisco to "buy" from "strong buy" for example, because he expects that company's revenue growth to drop to 25% from 30% due to economic weakness in Europe, Asia and across the financial services sector, which is as big consumer of networking hardware.