Recently acquired modem company US Robotics (USR) turned in storming profits in its first quarter. Net profits rose by 77 per cent to $91.5 million on turnover up 52 per cent to $690.2 million from $454.5 million last year.
But an up-and-coming price war between USR's new owner 3Com and other players in the networking arena - notably Intel with its new low cost hubs (see previous story) - meant its shares did not rise as much as expected on the US stock market.
That will cause USR shareholders to tremble a little. When 3Com and USR announced their merger, both sets of shares were riding high, but both were damaged by the Intel announcement and both companies face pending class actions from disgruntled shareholders in the US. Shares of 3Com closed at $27.5 cents while USR?s ended at $47 on Nasdaq yesterday.
Meanwhile, the border skirmishes between modem manufacturers looked set to escalate into a full blown war as USR started shipping its X2 56Kbps modems.
At the same time, USR set its stall out on PC Card technology using X2 technology, enabling laptop users to upgrade to 56Kbps modems. It offered a trade-in scheme for existing PC Card owners who want to upgrade to X2 units. In the US, that amounts to a rebate of $100 and is sure to heighten attempts by the rival K56 Flex consortium to push their technology through as an International Telecommunications Union standard.
Somewhat ironically, USR?s new owner, 3Com, is a member of the K56 Flex camp, headed up by Rockwell and Lucent.
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