A re-statement by 3Com means that its profit for 1997 is less than the company thought, even accounting for charges when it took over US Robotics.
The company revised its net profit from $597.6 million to $500.5 million for its fiscal year ended May 31, 1997. Net income per common share for that period has been restated as $1.42 instead of $1.69, according to company officials.
According to sources close to the company, part of the problem was that it could not shift as many USR 56K modems as it thought. Channel partners complained last year they were left with stock and that had left to a "virtual modem mountain".
The company admitted that last week it had three factors to consider. Those included swap outs on 33K modems in anticipation of upgrades, accurate recording of costs and goodwill write-offs following the merger with USR.
The statement said 3Com had made a complete re-assessment of the charges and Chris Paisley, 3Com's chief financial officer, admitted that the Security and Exchange Commission had reviewed its Form 10-Q filings.
?Up until Compaq?s acquisition of Digital, our deal with USR was probably the biggest merger in the history of the industry. If you add the fact that we had different fiscal periods, then there are bound to be ripples that need to be sorted out,? said Bob Cushing, 3Com?s global marketing director.
3Com has been under pressure since the merger with USR last June due to stock problems. Last year, millions of 33.6K bps modems were kept in storage while customers awaited the arrival of the standard compliant 56K bps models.
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