3Com falls below forecasts, more jobs lost

Struggling network equipment provider 3Com's fiscal first-quarter loss more than tripled to $232m as revenue plunged 58 per cent.

The company also said it will lose 1000 more jobs than previously announced, bringing its workforce total to 6000, effectively half the company.

The layoffs are part of 3Com's efforts to return to profitability. The plan also includes implementing a cost-cutting program targeted to save $1bn annually.

The loss for the period ending 31 August was 67 cents a share, compared with $59.2m, or 17 centsm a year earlier, the company said.

Sales plunged to $389.6m from $933.8m.

Excluding reorganisation charges, acquisition costs and other items, 3Com said its loss would have been $148m, or 43 cents a share, compared with $41.3m, or 12 cents, a year earlier.

Analysts polled by First Call predicted the company would post a loss of between 25 and 45 cents per share, with an average estimate of a 35-cent loss for the first quarter.

3Com chief executive Bruce Claflin said in a statement that the company made solid progress during the first quarter of its fiscal year.

"3Com finished ahead of plan for expense reductions and cash. The company demonstrated meaningful margin improvement and while revenue was below plan, there were some encouraging signs," Claflin said.

He added the company remains on track to achieve its goal of posting an operating profit again by the fourth fiscal quarter.

Like Cisco Systems, Lucent Technologies and other networking companies, 3Com has suffered from lower demand for its computer network cards, switches and internet access equipment, as well as from the US economic slowdown.

The company said it had $1.45bn in cash and short-term investments as of 31 August.

Further reading

• Skills

Job cuts: Reality bites

• 30 Jul 2001

• Management

3Com, Motorola announce job cuts

• 16 Jan 2001

• Web

3Com cuts 1200 jobs

• 27 Feb 2001

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