3Com Posts Loss, Expects Continued Slowness

3Com

3Com Thursday reported revenue of $356 million for its third quarter ended March 1, down from $630 million in the same period a year ago. Third-quarter revenue was down 10 percent from 3Com's second quarter of fiscal 2002.

The net loss for the quarter was $236 million, or 67 cents per share, compared with a net loss of $246 million, or 72 cents per share, in the same quarter a year ago.

On a pro forma basis, 3Com posted a third-quarter net loss of $42 million, or 12 cents per share--4 cents per share better than First Call consensus estimates. That compares with a pro forma net loss of $123 million, or 36 cents per share, in the year ago quarter.

"While there are some indications of an improving economy, these signs are less obvious within the technology sector and networking specifically," Claflin said. "This is particularly true for companies that serve carriers [and ISPs, where depressed earnings, continued [capital expenditure reductions, and other cost-saving initiatives remain today's priorities."

Speaking on a conference call with investors, Claflin said enterprise markets have shown clear signs of bottoming out, both in Europe and the United States.

"There is increasing interest from enterprise customers to leverage new technologies, but this too is against a backdrop of careful capital spending," he said. "So for the near term, we do not look to improving market conditions to restore profitability; rather, it will be through disciplined cost and expense management," including selected job cuts.

3Com's Business Networks unit, which encompasses its switch line, garnered third-quarter revenue of $191 million, down 1 percent from the second quarter. Those results are better than expected, Claflin said. The unit's third-quarter seasonal decline has averaged 5 percent over the past four years, he said.