CommWorks division sale spurs increased focus on larger customers
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3Com plans to expand its enterprise networking offerings in the wake of the sale of its CommWorks division, which builds hardware for telecom service providers.
3Com last week reached an agreement for UTStarcom to acquire selected assets of CommWorks for about $100 million in cash. UTStarcom is an Alameda, Calif.-based telecom equipment vendor with a significant presence in China. The deal is expected to close in 60 to 120 days, the companies said.
Under the deal, 3Com has licensed rights to patents and intellectual property it sold to UTStarcom. The networking hardware vendor plans to leverage those licenses to expand into higher-end data and voice offerings to enable 3Com and its solution provider partners to compete more effectively for midsize to large customers, said Anik Bose, 3Com's vice president of corporate development.
3Com partners said CommWorks' IP softswitch will become part of 3Com's NBX IP telephony line, providing a high-end enterprise solution to complement the small- and midsize-business solutions already available.
"Upon completion of this sale, 3Com will be a dedicated enterprise networking company, with a laser-like focus on meeting the needs of the enterprise customer," said Bruce Claflin, 3Com president and CEO, in a statement. "The sale of CommWorks for $100 million bolsters our already strong balance sheet."
3Com plans to enter new markets such as IP storage, Layer 4-7 switching, 10-Gigabit switching and modular switching, as well as expand its offerings in technologies such as IP telephony, security, wireless, Gigabit switching and Layer 3 switching, Bose said.
Solution providers said 3Com is making the right move. "To be a player in networking today, you have to have the full range of products, so I'm glad that 3Com is committed to moving in that direction," said Cary Vea, president of Polytron, a San Martin, Calif.-based 3Com partner.
Glenn Conley, president and CEO of Metropark Communications, a 3Com partner in St. Louis, said, "I've always felt that the 3Com sweet spot was too small. Now we'll be able to go after the medium- and high-level play."
He added: "3Com needs to make some positive strides to get back in the enterprise business."