3Com to eliminate 1200 jobs

(Telephony) 3Com today announced it will slash 1200 jobs to reduce costs and bolster operations in a sluggish telecommunications market in which customer spending has weakened.

The company said the layoff is part of its restructuring plan to save more than $200 million per year. 3Com also said it would continue reducing costs in other areas, including discretionary costs, product costs, and savings in plant and property equipment.

The move delivers on 3Com’s promise of last December that it would terminate workers by the end of February to achieve annual savings between $200 million and $250 million. A one-time charge--estimated to be between $40 million to $60 million--will be applied to its current fiscal third quarter.

The cuts represent 13% of the company’s total work force, which was at 9200 worldwide but now stands at 8000 employees. A 3Com spokesman said 900 full-time employees and 300 contract workers would be terminated.

3Com employees in the U.S., Asia and Latin America have been notified, but European job cuts have not been announced yet and will be added to the 1200, the spokesman said.

The company said its restructuring plan would reallocate funds toward business segments where its market share is greater.

“3Com will focus all of its resources on work critical to market leadership and superior financial returns,” 3Com president Bruce Claflin said in a prepared statement.