3Com's Palm sales strengthen quarterly results

Networking company 3Com yesterday reported second-quarter earnings of 37 US cents per share, up from 36 cents per share for the same period last year, and 3 cents higher than Wall Street expectations.

Analysts polled by First Call Corp. predicted 3Com would announce earnings per share of 34 cents for the second quarter ended November 26, 1999.

3Com earned $130.9 million in the quarter, excluding one-time items, down from $133.4 million in the same period last year, the company said in a statement issued today. Total net income was $177.3 million and included a net gain of $71.3 million from the sale of investments, and a $5.9 million charge for corporate realignment costs.

The company posted second-quarter sales of $1.48 billion, down 4 percent from $1.54 billion reported in the year-ago quarter.

Sales of the company's Palm handheld device in the quarter increased 50 percent to $260.9 million over the same quarter a year previous.

Network systems products, such as switches, hubs, routers and network management software totaled $593.2 million, down 12 percent from the previous quarter this year, 3Com said in the statement. Sales of personal connectivity products, including NICs (network interface cards) along with analog and cable modems, increased 15 percent over the previous quarter this year to $620.9 million.

"Supply chain management continues to improve, our balance sheet has never been stronger, the Palm IPO (initial public offering) is on track for early calendar 2000, and we are gaining momentum in several emerging high-growth markets, including wireless CDMA (code division multiple access), LAN telephony, and broadband cable and DSL (digital subscriber line)," Eric Benhamou, 3Com chairman and chief executive officer, said in yesterday's statement.

In related news, the company said that Chris Paisley, 3Com's senior vice president and chief financial officer, will resign next summer. Paisley has worked at the company for 15 years. No replacement was announced.

3Com also announced for this calendar year that it has a 44 percent stake of the worldwide market in 10/100 Ethernet connections across all platforms, including mobile, desktop and server. 3Com cited a report by the Dell'Oro Group Inc. that said the networking company's growth rate of 7.5 percent in worldwide 10/100 connections was almost twice as much as the total market growth rate of 4.3 percent.

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