3Com Lauds Channel Strategy Though Q4 Loss Increases

Nevertheless, President and CEO Bruce Claflin highlighted sequential growth, crediting the company's current channel strategy in part for "substantial growth" in the North American market.

The strategy, rolled out last fall, included dramatic increases to sales volume requirements for the upper levels of its Focus Partner Program. Its aim was to refocus Gold-level partners at large enterprise accounts.

"These changes were initially disruptive and caused us to have a temporary slow down in our channel-related sales. However, these were the right actions to take and now, six months later, we are seeing the benefits," Claflin said during a conference call to discuss the Marlborough, Mass.-based company's financial results.

Overall sales in the Americas region increased 20 percent. Worldwide, revenue from VoIP products grew 30 percent sequentially, while networking products increased 11 percent sequentially.

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For the quarter ended June 3, 3Com reported a loss of $58.3 million, or 15 cents per share, approximately three times the loss of $18.7 million, or 5 cents per share, reported for the same quarter a year ago.

Revenue for the quarter dropped to $176.6 million, down from $183.3 million the same quarter last year. 3Com's TippingPoint security division contributed $13 million in revenue, in-line with 3Com's expectations and approximately flat compared to TippingPoint's last almost full quarter as a stand-alone company.

For fiscal 2005, 3Com reported sales of $651.2 million, down from $698.9 million the previous year. The company narrowed its loss for the year to $195.7 million, or 51 cents per share, compared to a loss of $349.3 million, or 92 cents per share, the year before.

For the first quarter of 2006, 3Com expects to report sales between $170 million and $175 million.

Shares of 3Com closed up 8 cents Wednesday at $3.79 prior to the announcement.