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

To: Elmer Flugum who wrote (30278)	4/27/1999 2:25:00 PM
From: Kirsten	Respond to of 45548

From Yahoo Board SG COWEN by: Jo_Gun 33019 of 33020 3COM CORPORATION (COMS: $26 11/16) 27-APR-99 NOW THAT FORE IS GONE, WHAT IS 3COM WORTH?/BUY Chris Stix/Vijay Rajamani - SG COWEN RATING: Buy (2) With A $35 Target Price 1. Recent Acquisitions of FORE, XYLN, ASND Point To Continued Consolidation In Telecoms, Networking. 2. 3Com Is One Of A Small Number Of Mid-Cap Players Left. 3. Sum Of The Parts Over $36 To $51 Per Share/Share. 4. We Are Currently Unaware Of Any Merger Discussions. 5. Target Price Raised To $35. Stock Likely To Trade On Sum Of The Part Valuation. Investment Thesis: 3Com is the leading consolidator in edge networking products (modems, adapter cards, workgroup hubs, and switches). The company continues to have exceptionally strong market positions in adapter cards, hubs, modems, access concentrators and work group hubs and switches. It has a history of gaining share in client products and hubs, and we expect it to continue to do so. While we believe that COMS may face continuing challenges matching the industry leaders' growth rates due to a significant share of its revenues generated by zero to negative-growth hubs, modems and NICs, we do believe the company will achieve positive top- line growth going forward. While operating margins are likely to expand due to expense controls, gross margins are likely to be flat due to the lower margins on the faster-growth emerging businesses. Cash generation has been strong recently, as a result of better collections on accounts receivables and strong inventory management, reinforcing the value story. Our target price of $35 represents a discount to our sum of the parts value. With Continued Consolidation Investors Are Looking At Sum Of The Parts, Sale Value. With the recent sales of FORE, XYLN, and ASND the remaining mid-cap networking players are trading on their sale value. Sum Of The Parts Valuation Is $36 to $51, Though We Are Unaware Of Any Merger Discussions. We estimate that COMS sum of the parts valuation, in the sale of the company could be $13.7B to $19.6B, representing a valuation of $36 to $51. We maintain our buy rating on COMS on the likelihood of continued decisions that will lead to increased cash flow. In addition, there continue to be fewer sellers than buyers of mid-cap data networking companies, which means that the stock will continue to trade on the potential that telecom equipment, semiconductor and consumer electronics companies might make a bid for 3Com