Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: joe who wrote (27679)	2/5/1999 10:47:00 AM
From: Moonray	Read Replies (1) \| Respond to of 45548

After January slide, February sales crucial to third quarter San Jose Mercury, ADAM LASHINSKY - Published Friday, February 5, 1999 3Com investors on tenterhooks WHAT changed at 3Com Corp. (Nasdaq, COMS)? Since Jan. 20 -- the day Santa Clara-based 3Com held a bullish investor meeting in New York -- its stock has fallen 29 percent, from $48 a share to Thursday's close of $34.19, wiping out almost $5 billion in market value. In the last two days alone, 66.6 million shares of 3Com have changed hands, a volume normally traded in two weeks. According to 3Com, nothing has changed. The company says it is in one of its traditionally more challenging quarters of the year, and it won't know until the end of the month how it will turn out. Similarly, investors and analysts who follow 3Com say the company's public message hasn't changed since the late January get-together. But what has changed is 3Com's tone between the meeting and more recent communications with analysts. On Wall Street, tone is an exceedingly amorphous barometer, and its influence demonstrates the perils of investing in high-tech stocks -- especially in companies that have disappointed investors before, as 3Com has. To some extent, the drop was the result of investors' uncertainty in light of actions by competitors. These include price cuts by Intel Corp. (Nasdaq, INTC), an earnings shortfall at Newbridge Networks Corp. (NYSE, NN), and negative commentary about the networking industry from Cisco Systems Inc. (Nasdaq, CSCO). Also, 3Com's stock is volatile in part because, compared with Cisco, it sells high-volume, low-margin products, largely through distributors and retailers. ''There's a good chance that (3Com) may not make their published expectations,'' says Ajay Diwan, an analyst with Goldman, Sachs & Co. in New York, whose comments helped start the slide. More to the point, 3Com relies on February, the last month of its third fiscal quarter, to make up as much as 50 percent of its sales for the period. So 3Com isn't able to give much guidance to analysts, especially once its ''quiet period'' begins in the middle of the month. ''They're not holding anybody's hand because they have three tough weeks to go through,'' says Diwan. ''Nobody knows how the quarter will turn out.'' Paul J. Weinstein, the San Francisco-based analyst with Credit Suisse First Boston Corp., had a similar message for clients Thursday. ''We are still not able to provide comfort that 3Com can make the quarter, as it is simply too early to tell,'' writes Weinstein. ''With sentiment having shifted from positive to negative and the stock having broken down, only better visibility will turn the stock around.'' But analysts obviously came away from the Jan. 20 meeting confident 3Com would earn 36 cents per share, the same as it had in the second fiscal quarter. 3Com says its message hasn't changed, and it is acutely sensitive to any suggestion it hasn't done a good job of managing its relations with Wall Street. ''We aren't communicating anything different than we did at the end of the second (fiscal) quarter,'' a spokeswoman says. mercurycenter.com o~~~ O