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

To: Tim McGee who wrote (27846)	2/9/1999 11:47:00 AM
From: Moonray	Respond to of 45548

pdamart, llc Lowers Prices PRNewswire - 10:16 a.m. Feb 09, 1999 Eastern DELRAY BEACH, Fla., Feb. 9 /PRNewswire/ -- pdamart, llc announced today that they have lowered the prices on the 3Com Palm III and Palm Pilot Professional. At pdamart's website visitors will be able to purchase the Palm III for $279 and the Palm Pilot Professional for $179.99. The new pdamart prices are a direct response to an earlier announcement made by 3Com stating that the were lowering the prices of the Palm III to $299 and the Palm Pro to $199. In addition, pdamart will be lowering the prices of several Windows CE devices including the Casio E-11 and LG Phenom Express. pdamart, llc (www.pdamart.com) was established in 1998 to provide interactivity and information about PDAs and their use and a full complement of PDAs, accessories and software for sale. SOURCE pdamart, LLC Copyright 1999, PR Newswire o~~~ O

To: Tim McGee who wrote (27846)	2/9/1999 12:04:00 PM
From: bgg	Read Replies (1) \| Respond to of 45548

Tim -- Great post. Few comments/thoughts: You bring up some very good points on COMS upside. Cable business, DSL, modems do have good potential in the future. COMS' gigabit products are indeed very strong. One big problem though: Products like the CoreBuilder 9000 play in the Enterprise market, and 3Com does not have the strong direct sales force necessary to make a big dent in this market. I guess it's not entirely fair, but Cisco wins a heck of a lot of business because its account control and sales force are second to none, both in quality and quantity. 3Com also lacks a worldclass customer service and support organization. CSCO is best in the business here as well. So, I guess what I'm saying is that 3Com has very promising new products for the Enterprise, but lacks the sales force (quality and quantity), account control and strong customer service organization to take off in the network core. This limitation will also apply to the emerging converged network market .... even more so since direct relationships with SPs and telcos are key. Even CSCO, who is much more equipped, has a big challenge here. 3Com is very good at the low-end commodity business, but I still contend the stock will never perform to potential because COMS' growth and performance will always be put up against an impossible measuring stick. A LARGE majority of COMS' products are low-end. When over half of your company's entire revenues are NICs and low-end modems, you just aren't going to grow that fast. Sure, unit shipments will explode, just as prices will implode. Another 25% is in low-end switching, where prices are dropping fast or faster. Funny thing is, but COMS plays a big part in these diving prices. To win business, COMS is known for heavy discounting through the channel. By practice, they sacrifice margin to win business. Short term that's fine, but it catches up with them in the longer term when they can't match R&D spending of the Cisco's and Lucent's of the world. One more thought: COMS will not be a major telco/SP supplier without a strong portfolio of WAN switching and high-speed IP routing products. Maybe buying Juniper before Lucent does would be a good step. But then again, you run into the same fundamental problem: No sales force to move high-end stuff. (not saying the sales force is non-existant .. just not enough experienced quality reps ingrained in major accounts.) So is COMS a good investment? Sure. Even with falling prices, that 75%+ low-end product mix will still provide steady, but unspectacular growth. You could do a lot worse. I just don't see the stock performing to potential thought, because there are too many cards and market dynamics stacked against COMS in regards to Street expecatations. A good company with only a few toes in the door to a huge future market. COMS could be acquired, but I would think long and hard before swallowing that pill. COMS is still suffering from USRX indigestion. CSCO has some near-term concerns with a slowing Enterprise market, but they are fully engaged in tackling the SP/Telco market for converged networks. Thus far, the huge growth shown already in an infant market have offset a slowing (but still great growth by any sane measure) Enterprise market.

To: Tim McGee who wrote (27846)	2/9/1999 3:16:00 PM
From: joe	Read Replies (2) \| Respond to of 45548

Tim, Thanks for the thoughtful post. Always good to get posts that make one "think through" the stock, rather than react on emotions. Easy to say, but sometimes hard to do. Nonetheless, all of us have to start to use our reasoning after this last painful selloff. To make it simple (I'll try at least), this is the way I look at our situation: A few weeks ago, COMS was in a good position having built up some credibility with the Street and investors. The WS conference on Jan 20 (MS I think) was a success, and the consensus of the major quality analysts was very positive. Presently, the stock dropped in price terribly (over 30%) on no "hard evidence". Not even a pre-announcement. This to me is what's most disappointing, but I take it as another lesson to be learned about the Street. Stocks can go down without a pre-announcement; just general fear which may or may not be unsubstantiated by "hard evidence". So, COMS is in the "dog house" again. Also, it seems that what the Street is most worried about is the present COMS back-ended quarter (which means that historically for COMS, about 50% or so of sales are in Feb., the last month of this quarter), worried that last month (jan) is possibly worse than expected for hi-tech sales, making this month possibly even more difficult on sales, and therefore possibly falling short of the 36 cent forecast (earnings report to come out around March 23). The Street needs visibility for this quarter and it just doesn't have it now. Without visibility, the Street becomes ultra-phobic, especially with a stock with the history of COMS. In hindsight, IMO, this has been the fear which prevented us from "breaking through" $48 barrier last month - the uncertainty of jan and feb sales. So to summarize: A few weeks ago, COMS was in an "OK" position, and now it's in the "dog house" with shorts and potential longs salivating at thoughts of $25/share. And we are all waiting to see if COMS has a "problem" or not with Jan and Feb sales. If not, then COMS will go on to future glory afterwords (especially, if as they say, the following quarter will be a strong one). If COMS misses estimates, then it could be in the dog house for a while (even though COMS has been honest with the street about this quarter, and there may be a future AT&T contract breaking out soon, which will solve all our problems; but I don't want to get into the "what ifs" about the future in this post). IMO, the thing to focus on for the moment, is the fact that a lot depends on how Jan and Feb sales have and will be. It seems that the Street is somewhat undecided, ambivalent, and worried about sales being worst than expected. To me this is the key factor we should be focusing on. JCramer wrote, what I thought, a good article (Let's Let the Real Tech Hitters Speak; 2/9/99 7:22 AM ET) explaining this difference of opinion on the Street. For the most part, I thought December went well, and so did Jan. I was surprised to hear about fears of Feb. from what I have been reading the last month or so. This is what I'd like to see "hard evidence" about, and IMO, this is what the street is predominantly focused on at the Montgomery Conference going on now. A couple of companies, Tech Data, SCI, AMD, etc have done poorly recently. Is this a COMS problem or not? I don't think so, but we need some "hard evidence" to know for sure. regards, joe