3Com posts 3Q loss, announces $1 billion restructuring plan

(Telephony) 3Com reported a larger than expected third-quarter loss today and announced cost-cutting measures designed to save the hobbled network equipment maker $1 billion by the end of the fiscal year.

The company blamed the loss on a continued economic downturn in the telecom sector that has impacted negatively on demand across its product line.

For the third quarter, 3Com posted a pro forma net loss of $122.8 million, or 36 cents per share. That compares to earnings of $80.3 million, or 22 cents per share, for the same period last year.

According First Call/Thompson Financial, analysts polled expected a loss of 33 cents per share.

A spokeswoman said that going forward the company would concentrate on its core markets of enterprise small business, SOHO and its carrier segment, which is 3Com’s CommWorks subsidiary.

The company said it would continue targeting cost savings in headcount, plant property and equipment, product costs and discretionary costs. 3Com said it has already saved $250 million and would save another $250 million by ending its Internet appliance product line, which it will stop marketing at the end of this month and discontinue entirely by the end of the quarter.

To attain the additional $500 million savings this year, 3Com said it would improve “the use of financial, physical and human assets, while simplifying its business structure, product lines and systems.”

Despite its aim to make human assets more cost effective, a spokeswoman would not elaborate on how the company would achieve this, and said that lay-offs have not been announced.

“We haven’t announced a reduction, [but] we are targeting these areas,” she said.

3Com announced last month that it would reduce its workforce by 1200.