3Com Corp. (Nasdaq: COMS) was up 0.19 at10.56 early Tuesday, following reports that the networking equipment makeris planning job cuts.
The Santa Clara, California-based company is reportedly cutting jobs as part of a plan to cut US$200 million to $225 million in costs per year. Some reports said the number of jobs to be cut will be determined bythe end of February, while others said the company will lay off 20 percent ofits workforce.
For its latest fiscal quarter, ended December 1st, 3Com reported a lossbefore extraordinary items of $52.4 million, or 15 cents per share, onrevenue of $789.5 million. The company, like others in the telecom equipmentbusiness, has been hit by a slump in demand for its products.
3Com said in December it would spin off its carriernetwork business into a separate subsidiary, CommWorks Corp. The planwill give the new unit “the freedom and resources necessary for success inthe carrier marketplace, while leveraging the financial and technicalstrengths of 3Com Corp.,” president and chief operating officer BruceClaflin said in announcing the plan.
The spinoff and related restructuring will result in a charge of between $40million and $60 million in the quarter ending March 2nd, 3Com said. Thecompany did not mention job cuts at the time, but said the plan will savebetween $200 million and $250 million per year.
The company said it expects to post an operating profit by 2002, assuming thestreamlining plan works and revenue grows at a moderate rate.