3Com axes web appliances

A sharp nosedive in its third-quarter results has forced 3Com to pull the plug on its consumer electronic devices, including its flagship Audrey web appliance.

The network tools maker said it would stop selling Audrey at the end of the month, and halt production of it and its Kerbango online radio service by the end of this quarter.

Audrey and Kerbango were the only two products to emerge from 3Com's high-profile web appliance division, which is likely to be axed. Audrey, which was launched amid much fanfare in October, came in five colours and was designed mainly for use in the kitchen.

Bruce Claflin, 3Com's chief executive, said: "While we continue to believe in the appliance's potential, it's clear it will take longer to develop than originally planned and is likely to generate losses for the foreseeable future."

Sales of 3Com's consumer products fell 14 per cent from the second quarter to $73.5m in the third quarter. A spokesperson said the decision to cut consumer products was purely financial.

Overall, the company reported a loss of $122.8m, or 36 cents a share, for the period ended 2 March, compared to a profit of $80.3m, or 22 cents per share, a year earlier. Analysts had adjusted their predictions to a loss of 43 cents a share after 3Com issued a profit warning on 28 February.

Revenue for the quarter fell 18 per cent to $629.6m, down from $763m in the fourth quarter of 2000.

"The abruptness and severity of the current technology slowdown has clearly impacted 3Com. While 3Com has maintained or increased market share in its key segments, these gains were not sufficient to offset the decline in the industry," said Claflin.

The company plans to save $1bn in costs by the end of its fiscal year, mainly through job cuts. It has already axed 1200 jobs under a previously announced cost cutting exercise.