bgg, some comments/responses to your post:
>>Cable business, DSL, modems do have good potential in the future.<<
Your post has a lot of good points, but I sense a strong
negative bias in your tone. If COMS succeeds just a few of the
above businesses, it will be a great stock investment for the next 1 to 3 years.
You are *always* mentioning CSCO. Yes, CSCO is a great company,
maybe COMS will never be as good. That's not the issue. The
fact is that COMS does not compete against CSCO. To imply
that it has a failed strategy because of this is wrong, IMO.
>>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.<<
Maybe true. So what. COMS has the best channel distribution
around. One could make an argument that CSCO's weak point is
they rely too much on direct sales. I've noticed over the last
6 months or so, that CSCO is using the channel more.
Also, COMS will soon have a very strong direct sales channel
through on-line sales just as CSCO has.
And again, COMS is not competing heavily in the enterprise space
with CSCO.
>>This limitation will also apply to the emerging converged network market .... even more so since direct relationships with SPs and telcos are key<<
Again, COMS is not competing directly with CSCO for large telco
contracts. It's working on "the edge" and though it has RAS
products, my understanding is that it's not quite the same
as being involved in "the core" with the big telecoms.
But for what it's doing, it's
doing well, and has alliances/partnerships for further support
(Siemens/NN, etc.) on areas of weakness, AND, areas of novelty
where even CSCO and LU are not involved in (internet telephony
products I believe).
>>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.<<
I am sick and tired of hearing this statement alone, by itself.
Put some meat on the argument, some specifics of why. Where exactly
is COMS failing in it's semi-monopolized lower-end products?
DELL is low margin, commodity company and look
how d*mn efficient and profitable it is. This is becoming COMS strength as well, being able to beat competitors in a pricing
and quality matchups. I don't care
if the company doesn't grow 50%/year, but 25-30%, to me on a
consistent basis is mighty fine. This is a reasonable expectation
by most analyst, and at the moment, the stock is supremely undervalued
if the assumption is true. And, if we ever get the world economy
cranking like in '95 and '96, the growth rate will be much higher.
E.Asian markets are a gold mine, which it wouldn't surprise me that
COMS has the best ability to exploit of all the networkers.
>>Another 25% is in low-end switching, where prices are
dropping fast or faster. <<
Tell us something new about the tech sector. My gosh, no matter
how good a company is, it's always under the gun of obsolence.
Every tech company is reinventing the wheel a few times every year.
One reason I like COMS is because it's working on a strategy for
longevity, not so much to be the fastest growing stock. CSCO is
a great company and great stock, but I start getting queasy when
P/E's get over 100. To me P/E's over 100 need to perform
perfectly. A slow down in CSCO's enterprise sales, with a possible
stall in sales to telco's and I wonder what CSCO's price will do.
Still, CSCO is a great stock, and I own it myself, but not
for the same reasons I own COMS, which is the main fault I see
in the comparison game. Both stocks should be owned for different
reasons, IMO.
>>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.<<
Again, there is nothing wrong with this strategy, as long as COMS
is able to reduce costs, which it has been doing very
well, and IMO, has an excellent strategy to continue doing this.
Generally, all present high-end products will become commodity
products, and COMS's strength is winning in this environment. Look
how it's ripping up INTC's and CPQ's ability to get into the
network sector. I believe strongly, that CSCO's attempt to get
into the home sector on lower margin products to compete with
COMS is nothing but PR bs at the moment. I would love to see,
just as an exercise, CSCO get into lower-margin consumer
home products and see how their stock price does (but not really,
because I own CSCO also).
>>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.<<
IMO, you got it wrong. COMS has an very wide selection of future
products coming up, of which only a few need to be successful
for investors to make a nice profit.
Street expectations are low right now because they think hi-tech
is slowing and this back-ended quarter will hurt COMS. Not enough
visibility at the moment for investors to feel good about putting
money in COMS *and* the tech market in general.
I suspect, though, that the Jan and Feb months will have stronger
sales than the gloom and doomers have been predicting.
Nothing wrong with COMS at the moment, expect that investors are
petrified about sales for this month of February. Even if
COMS were to miss by a few cents, it's not a big deal, since
COMS has been up front about this quarter, and the following one
will be a strong one. Maybe if COMS misses by a huge amount,
then we should worry, but I see no evidence of this.
Keep the posts and comments coming so we can get all the
facts on the table.
regards,
joe
PS...one last time: COMS strategy is not to compete against
CSCO in the enterprise and "core" network sectors. It's success
is not dependent on it. It will do great in VoIP space, and in
working at "the edge". Plenty of $$ in this area for any
company with decent execution.
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