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

To: joe who wrote (26063)	12/11/1998 1:04:00 AM
From: pat mudge	Read Replies (1) \| Respond to of 45548

Financial Times article: <<< THURSDAY DECEMBER 10 1998 Europe SIEMENS/3COM: Computer telephony joint venture By Roger Taylor in San Francisco Siemens of Germany and 3Com, the US computer networking company, are forming a $100m joint venture to target the rapidly growing market for converged voice and data networks. The 50:50 owned enterprise will design equipment that allows companies to handle their telephone calls over their computer networks. This relatively new market, which is expected to grow to $4bn over the next three years, has a number of uses. In the management of call centres, for example, it would allow someone viewing a company's web site to connect instantly to a live salesman. It would also facilitate video conferencing through personal computers. As well as designing the equipment at the core of such networks, the new company will provide software that allows phone calls to be made by computers and telephones that communicate over the internet. The new operation, which will be launched with about 200 engineers and assets of $100m including intellectual property from both companies, will work solely on research and development. The products will be manufactured and marketed by the two joint venture partners under their existing brand names. The move comes during a radical restructuring at Siemens and reflects 3Com's need to find its way back into higher-margin product markets, especially in the US, where it has been losing ground to rivals such as Cisco Systems. The deal also marks an increasingly close relationship between the two companies which already have an alliance to cross-market each other's products, and which are also working with Newbridge Networks of Canada to develop high-speed data networking equipment for telecommunications groups. Ron Sege, senior vice-president of large enterprise business at 3Com, defended his company's strategy of working through alliances as the best way to approach the market for converged voice and data equipment, which has been driving a number of mergers and acquisitions in the industry. "We would contrast our approach with the go-it-alone route or the acquisition route, both of which have significant pitfalls," he said. Big mergers between data companies and telecoms groups, most notably the takeover of Bay Networks by Nortel, merely act as a management distraction, he said, while data networking groups such as Cisco, which have decided to attack the market on their own, underestimate the challenge they face. However analysts are likely to view the alliance as a defensive move by two companies that are finding it hard to compete in an aggressive marketplace. >>>>