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

To: djane who wrote (28809)	3/7/1999 4:21:00 PM
From: Shroder Wertheim (Hijacked)	Read Replies (5) \| Respond to of 45548

COMS stock problem: WS management. If after the second quarter result release, it guides the earning for the third quarter at around 25c, the stock will not take such a bad tumble. 3COM is still a 6B company, its third quarter at estimated 23c still much better than last year's 2c, its estimated 1.4B revenue is much higher than last year same quarter 1.2B. The stock is incredible cheap based on its performance, year to year revenue/earing growth rate I believe this is the most undervalued stock due to the lack of faith on the company. Still I like to point out couple faults of this company. Wrong focus overall. For in NIC and Modem. First priority for doing a commodity business is to get the product cost down, get the spending down. 3COM spent lots of energy for the past two years doing IP-fast, adding intelligent to the NIC, now add IPSec and processor to the NIC – which all these will address maybe 1% of the NIC market, yet it represents 80% of NIC R&D dollars. For system product, Eirc Benhamou wants to avoid Cisco and focus on the "edge" of networking. That is a defeatist strategy for a #2 networking company. A small company may be able to choose a niche and does well. For #2 company, you have to fight with the #1 company or you die. Edge network is a tougher business to fight than the core network. Every networking company is in that space because it is easier to enter the Edge network business. Edge network and SME are no repetitive business. Core network is lucrative and strategically more important business. Cisco's R&D is not well run in the last couple of years, Cisco direction is right and it does have the products for the core, even though most Cisco core products are bad. Thanks to Eric B. strategy, Cisco owns the core with mediocre products. Some startups choose to fight Cisco are having great success – Juniper is only shipping M40 for 4 months, and it is in the run rate of 100M annually. Foundry is fighting Cisco in the ISP and large enterprise, it is in the run rate of 70M annually. Can you image if M40 is in 3COM's hand? It will be 65% gross margin and 1B a year business. Culture. 3COM is too relaxing. Cisco does not have better employees, but it is hard charging. It is up to Eric B. and his company if 3COM wants a big chunk of high growth market. But it has to work hard to get it. Cisco simply does not have the best of breed products in any market. Just look at newly released Cisco CAT 6000/6500, it tops at 6Mpps IP forwarding rate. Foundry can do around 90Mpps at 70% price.