3Com hits revenue target, misses earnings

3Com reported revenues in line with lowered guidance but missed on earnings for its fiscal fourth quarter.

For the quarter ending June 1, the company posted a pro forma net loss of $206 million, or 61 cents per share, lower than the analyst-consensus projected loss of 57 cents per share taken from First Call/Thompson Financial. Net loss was $518 million, or $1.52 per share.

Revenues for the quarter were $468 million, which was in line with guidance of $450 million to $475 million. That guidance had been lowered however, from $550 million to $600 million.

Currently 3Com has about $1.64 billion in cash and short-term investments and about $856.4 million in total current liabilities.

“Demand for our products, as with the rest of the industry has dramatically declined,” said 3Com President and CEO Bruce Calflin. “But the impact has been even greater for us than many others, because segments where we have traditionally been strong were the hardest hit in the downturn. These segments include RAS, 10/100 NICs, and 10/100 Layer 2 switching. While impossible to quantify, our revenue has been impacted by the massive nature of our restructuring itself.”

This restructuring, which was announced along with the previous quarter’s earnings, includes the layoff of 3000 employees and the discontinuation of the company’s cable-modem and DSL-modem product lines.

It also includes organizing the business into three operating units: the CommWorks subsidiary, which focuses on service providers; Business Network, which focuses on enterprise customers; and Connectivity, which focuses on network access.

Under this restructuring plan, 3Com predicts positive cash flow during the next fiscal year’s second quarter and a profit during next year’s fiscal fourth quarter.