3Com Falls on Q3 Loss

3Com (Nasdaq: COMS) was at US$6.13 in morning trading Wednesday, down 9 cents, after the company said that weak U.S. demand led to lower revenue and a loss for the third quarter ended March 2nd.

The networking equipment maker also announced plans for more layoffs and said that it will take steps to cut costs in its broadband modem division. In addition, 3Com said it will stop making consumer Internet appliances as it attempts to deal with a slumping telecom industry.

Previously, in February, 3Com announced plans to lay off 1,200 people, or approximately 10 percent of its workforce.

Santa Clara, California-based 3Com said revenue for the third quarter fell to $629.6 million from $1.14 billion in the year-earlier quarter, and was 18 percent below the second quarter.

The company reported a pro forma loss of $122.8 million, or 36 cents per share, along with a net loss of $246.0 million, or 72 cents. A year earlier, 3Com earned $506.3 million, or $1.46 per share.

“The abruptness and severity of the current technology slowdown has clearly impacted 3Com,” said president and chief executive officer Bruce Claflin. “While 3Com has maintained or increased market share in its key segments, these gains were not sufficient to offset the decline in the industry. Therefore, 3Com is taking immediate steps to reduce costs and achieve profitability.”

3Com said it will restructure its operations to focus on “core markets,” a plan designed to save $1 billion a year. Job cuts and other actions in the current quarter will save $250 million, and another $250 million will come from the consumer side, as the company cuts broadband modem costs and discontinues its Internet appliance lines.

The remaining $500 million will come from additional cost cuts, the company said. Restructuring and other charges will be taken over the next two to four quarters, 3Com said.

“Despite these cuts, 3Com will continue to invest in products and markets where it can lead,” Claflin said. “We are an early leader in wireless solutions, IP telephony and gigabit Ethernet, with strong positions in the carrier and commercial markets. We intend to build on these strengths going forward.”

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