3Com Gains on Job Cuts

3Com (Nasdaq: COMS) edged higher in morningtrading Monday after the computer products company announced plans tocut 1,200 jobs as part of an effort to reduce costs and focus on profits.

At midmorning, 3Com was at US$9.25, up 22 cents.

Layoffs will be across the board, covering full-time employees as well as”the alternative workforce,” Santa Clara, California-based 3Com said.

President and chief executive officer Bruce Claflin said the move is part ofa cost-cutting initiative announced in December to deal with “the U.S.economic downturn and turmoil in the telecommunications industry.”

According to Claflin, 3Com plans to focus its resources on work critical to “superior financial returns.” The company plans toscale back spending in the areas of employment, discretionary costs,product costs and equipment.

“3Com willcontinue to report significant milestones towards this end as it focusescompany resources on markets, technologies and products where it can lead,”the company said.

In December, 3Com said it would spin off itscarrier network business, taking a one-time charge of $40 million to $60million to earnings for the third quarter ending March 2nd. The company,however, said it expects the move to save $200 million to $250 million ayear.

“3Com intends to have two growth businesses, each of which generatessuperior financial returns,” Claflin said at the time.

Claflin also said that 3Com is committed to obtaining the benefits of focus while investing in products andservices that drive profitable growth.

“All these actions are intended tocreate increased shareholder value,” Claflin said.

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