Third quarter results at 3Com were in line with Wall Street expectations and its own predictions. The networking company turned in sales of $786.8 million, a 30 per cent rise on the same period a year ago. The profit hike broadly matched the increase in turnover, amounting to $87.6 million for the quarter.
But the company results illustrated the quandary 3Com was in until its acquisition of US Robotics a few weeks ago. Its business is divided into sales of network adaptors, accounting for turnover of $346.3 million, and the more lucrative business of hubs, switches and internetworking products, which made 3Com $432.6 million in sales. The former category is a declining cash cow for 3Com - Ethernet network interface cards are fast becoming a commodity item, with a recent price cut by Intel demonstrating the trend downwards.
But Eric Benhamou, chief executive of the company, said his company was now focusing on what he described as ?end to end? networking systems. He said: ?During this quarter we saw strong demand for our high end networking solutions, particularly ATM systems and the number of multi-million dollar orders we received from large accounts has never been greater.?
Figures for the nine months ended on 28 February included a charge of around $6.6 million for merger costs, after 3Com bought Onstream Networks. 3Com also bought Chipcom within the nine-months period and after the charge, net profit was $197.6 million.
The 3Com acquisition of US Robotics will come in its last quarter, with shareholders seeing what charge comes against their investments.
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