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: Gopher Broke who wrote (28999)	3/15/1999 7:45:00 PM
From: Smart Investor	Respond to of 45548

It is all a matter of execution. DELL is in a low margin commodity market, which does not prevent it from making good money. 3com is cheap compared with other networking companies. Its projected next year earning is $1.50, which makes it a P/E of only 16! Compared that to CSCO's P/E of more than 80! I would rather hold COMS at the current price rather than CSCO. Nowadays, everybody is chasing high P/E and interNUTS stocks, and leave many decent companies at very cheap valuation. This situation will change. When it does, we will get rewarded. How far CSCO can run when its market cap is already at 166 Billion? How far AOL can run when its market cap is already at 100 billion? While COMS has a market cap of only 9 billion.

To: Gopher Broke who wrote (28999)	3/16/1999 4:41:00 PM
From: BobInBush	Respond to of 45548

Gopher; 3Com does have what is known as the Enterprise divisions. They make high margin switches and lan hubs. This starts at the superstack line up to the CoreBuilder line. These products compete directally with Cisco. 3Com has a growing market share in the Level 2 and Level 3 switching market. Granted Nic's and modems are low margin, but produce brand name recognition. One of 3Com's founders invented ethernet. They just need to do better at selling what they have.

To: Gopher Broke who wrote (28999)	3/16/1999 9:13:00 PM
From: robz	Read Replies (1) \| Respond to of 45548

3Com's PE is not 30. That is misleading because it is based on trailing 12 months earnings. Seeing how 3com has not reported 3rd quarter earnings yet (last year reported 2 cents, this year it will be 23 cents)their real PE is something more on the lines of 24. But even that doesn't tell the full story because last years 4th quarter was 17 cents, this year it will be 27-30 cents. In reality, the true PE is about 18. Also, seeing how they are currently in their 4th quarter, they should soon be trading on fiscal year 2000 earnings. As far as future growth, they will have to rely less on the analog modem business as the cable modem market is ramping up quickly. Also, they will have the higher margin businesses of Storage Area Network(SAN), IP telephony, layer 3 switching, and new products that will derive from the Siemens alliance for the carrier-class market. So yes, I believe, 3Com is a great buy at this level with very limited downside. It will be back in the 50's by this time next year.