3Com Narrows Its Losses, But Sales Slide

By Matthew Hicks  |  Posted 2002-06-26 Print this article Print
3Com Corp., in its latest earnings released Tuesday, narrowed its losses but saw a continued slide in overall sales. The Santa, Clara, Calif., networking vendor reported a net loss of $24 million, or 7 cents per share, for the fourth quarter ended May 31. That compares with a net loss of $518 million a year ago and a loss of $236 million a quarter ago. "We exit the year in fundamentally better shape in almost every aspect from customer relations to financial performance and are well-positioned for the future," said Bruce Claflin, 3Coms president and CEO.
Along with its earnings, 3Com on Tuesday announced that its chief financial officer, Mike Rescoe, has stepped down from that position for personal reasons but will continue to advise Claflin. He has been replaced with Mark Slaven, who previously was a 3Com vice president and treasurer.
For the quarter, sales, at $339 million, were down 28 percent from the same quarter a year ago. Fiscal 2002 sales were $1.5 billion, nearly half the $2.8 billion in sales for fiscal 2001. One bright spot in sales was in the Business Networks Co. division of 3Com, which makes enterprise LAN switches and telephony equipment. Sales were up 2 percent in the fourth quarter over the quarter before; sales for the companys service provider and network interface card-focused divisions, however, fell in the double digits. On a pro forma basis, 3Com beat analysts expectations for a loss of 2 cents per share by recording a 4-cent-per-share profit. Claflin said that 3Com is in "fundamentally better shape" than it was at the start of the fiscal year and is most optimistic about business in its enterprise switching business, where revenues in Layer 2 fixed switches grew 1 percent sequentially in the fourth quarter and revenues for Layer 3 fixed Gigabit switches jumped 16 percent. "We intend to gain market share over the competition," Claflin said of the enterprise business. "We will do this by leveraging new technologies and by exploiting our increasingly competitive cost position." The company continues to launch new enterprise products this year, including the introduction this week of a new Layer 3 LAN core switch to work with its much-touted XRN technology for interconnecting distributed core switches.
Matthew Hicks As an online reporter for eWEEK.com, Matt Hicks covers the fast-changing developments in Internet technologies. His coverage includes the growing field of Web conferencing software and services. With eight years as a business and technology journalist, Matt has gained insight into the market strategies of IT vendors as well as the needs of enterprise IT managers. He joined Ziff Davis in 1999 as a staff writer for the former Strategies section of eWEEK, where he wrote in-depth features about corporate strategies for e-business and enterprise software. In 2002, he moved to the News department at the magazine as a senior writer specializing in coverage of database software and enterprise networking. Later that year Matt started a yearlong fellowship in Washington, DC, after being awarded an American Political Science Association Congressional Fellowship for Journalist. As a fellow, he spent nine months working on policy issues, including technology policy, in for a Member of the U.S. House of Representatives. He rejoined Ziff Davis in August 2003 as a reporter dedicated to online coverage for eWEEK.com. Along with Web conferencing, he follows search engines, Web browsers, speech technology and the Internet domain-naming system.

Submit a Comment

Loading Comments...
Manage your Newsletters: Login   Register My Newsletters

Rocket Fuel