3Com ditches modems in restructuring move

Networking giant 3Com will stop selling PC modems and large-scale networking equipment as it shifts its focus to small and medium-sized businesses and service providers.

The company will move away from its core switching and routing business and put more emphasis on voice-over-IP, wireless data services and broadband access products. Products to be discontinued include Corebuilder, Pathbuilder and Netbuilder.

The shake-up also sees 3Com shake off the US Robotics brand - the modem maker it bought in March 1997 in an acquisition that proved more troublesome than beneficial.

Eric Benhamou, chief executive of 3Com, said: "We're focusing on markets where we have established a leadership position, while making strategic investments in new technologies and partnering with companies that strengthen ourofferings. In addition, we're transitioning out of businesses that are no longer strategic to 3Com's future."

Analysts welcomed 3Com's restructuring, which had been anticipated since its closest competitor, Bay Networks, was acquired by Nortel Networks almost two years ago.

John Armstrong, an analyst at researcher Dataquest, said: "3Com had been in a state of denial for a while, and if it continued, it would have been in a death spiral. The issue is, can it now focus research and development and sales and marketing properly? Until then it has made, at least, a healthy start."

3Com will sell its analogue desktop and PC Card modem businesses to a new company being formed with Singapore-based manufacturing company NatSteel Electronics (NEL) and networking equipment designer Accton. NEL will buy 3Com's manufacturing plant in Illinois along with its 1,200 staff.

As a result, the supplier will discontinue its Corebuilder Lan product for large companies and is urging customers to migrate to Extreme Networks' Summit and BlackDiamond switches. Extreme will also take on an unspecified number of 3Com's 200 sales, engineering and marketing staff.

3Com also intends to stop making its Pathbuilder and Netbuilder Wan offerings and will ship its last large enterprise Lan and Wan equipment on 30 June.

The as yet unnamed company will also be responsible for 3Com's US Robotics brand and employ the 250 staff that currently work on modem technologies. 3Com will continue to sell its Combo PC Cards for mobile devices, home networking tools and internet appliances.

3Com plans to boost its CommWorks converged voice, video and data services architecture. The company will acquire unified messaging vendor Call Technologies for $90m and team up with digital subscriber line (DSL) provider Copper Mountain to provide it with access to the firm's DSL concentrators. 3Com will add the concentrators to its DSL modem family.

The networking company will also invest $20m in web information specialist Cais Internet as part of a deal to jointly develop internet access services for the hospitality industry. Cais provides web access to hotels, airports, exhibition centres and restaurants.