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

To: pat mudge who wrote (26422)	12/22/1998 8:42:00 PM
From: Moonray	Read Replies (3) \| Respond to of 45548

More: 3Com Quarterly Profits Top Analyst Expectations Reuters - Tuesday December 22 7:38 PM ET PALO ALTO, Calif. (Reuters) - Quarterly profits posted by 3Com Corp., the No. 2 computer networking maker, sailed past Wall Street forecasts on the strength of brisk worldwide sales of new products, particularly in Western Europe. The company Tuesday said profit before a charge for the second quarter ended Nov. 27 rose to $133.4 million, or 36 cents a share, from profits of $86.7 million, or 24 cents, in the year-ago period. Revenue surged 29 percent to $1.54 billion from $1.19 billion in the year-ago period. Buoyed by new products, the largest maker of computer modems and of the Palm handheld organizer also surged past the so-called whisper number -- circulated among traders -- of 33 cents to 34 cents a share. The consensus estimate in First Call Corp. survey of analysts was for earnings of 31 cents a share. ''This was just a stellar quarter,'' said Michael Cristinziano, an analyst at Gerard Klauer Mattison in New York, who rates shares of 3Com as a ''buy.'' ''The stock should react positively.'' Western Europe was the star performer during the quarter as revenues outside the United States surged by 38 percent to $698.7 million while U.S. revenues rose 22 percent to $841.8 million. ''By any measurement, we're doing much better,'' said Bruce Claflin, 3Com's president and chief operating officer in a telephone interview. The news sent 3Com stock, which has nearly doubled since October, as high as $50 in after-hours trading. In regular trading on the Nasdaq, 3Com rose $1.50 to $48.63. The stock has rallied, analysts said, amid a comeback in technology stocks and as 3Com has ironed out the last of its difficulties in acquiring US Robotics, which it bought last year. Excluding charges, 3Com's net income rose to $132.9 million, or 36 cents a share, from $93.7 million, or 26 cents, in the year-ago period. In the most recent quarter, 3Com took a $600,000 merger-related charge. Profits rose as the Santa Clara, Calif.-based company boosted sales of modems, network interface cards, or NICs, which connect PCs and other gear that connects computers in networks. The company also told analysts on a conference call that it planned to boost spending on research and development to gain an early foothold in emerging markets such as home networking, voice over the Internet and cable modems. Eric Benhamou, 3Com's chairman and chief executive, told analysts on the call that products rolled out less than a year ago accounted for 60 percent of its total revenue, an all-time high. It was also the first quarter that it closed more than 100 deals each with a value of over $500,000. Even so, 3Com executives cautioned that its third quarter -- running from December through February -- is historically the slowest of the year. It advised analysts that revenue would likely be down slightly or flat with the second quarter. ''The third quarter will be our toughest to get sequential revenue growth,'' Chris Paisley, 3Com's chief financial officer, said on the conference call. The No. 1 networking company, Cisco Systems Inc. (Nasdaq:CSCO - news), as well as Ascend Communications Inc. (Nasdaq:ASND - news), 3Com and telephone equipment companies such as Lucent Technologies Inc. (NYSE:LU - news) are all racing to develop and sell gear that moves traditional phone networks onto the digital networks used by computers. It is less costly and more efficient to turn voice into digital packets and shunt them over data networks rather than use old-world circuit-switched based networks now used to carry telephone calls. ''The trend toward convergence of voice and video traffic into data networks is undeniable,'' Benhamou said during the conference call. ''This is truly a fundamental change to our industry.'' o~~~ O