3Com reports solid third quarter

Despite unexpected slowness in North and Latin American enterprise markets, 3Com's revenues grew 13 per cent in the third fiscal quarter, to $US1.4 billion, according to the networking equipment maker.

Reported income for the quarter, ended February 26, soared to $89.7 million, or 24 cents a share, a six-fold increase from $13.9 million, or 4 cents a share, a year ago. The earnings beat by a penny the consensus estimate of 24 brokers polled by First Call.

The figures include a pre-tax credit of $7.3 million related to a change in previously recorded merger and restructuring expenses, and a pre-tax charge of $7.1 million associated with 3Com's acquisitions of French wireless ficompany Smartcode Technologies and part of ICS Networking. Reported net income a year ago included a net pre-tax credit of about $9.9 million related to 3Com's acquisition of US Robotics in June 1997.

Pro forma income, or income excluding the pre-tax credit and charge, for the quarter was $89.6 million, or 24 cents per share, compared with pro forma income of $7.4 million, or 2 cents per share, a year ago, the company said.

The results were hurt slightly by seasonal factors and by an unexpected slowdown in end user demand in the North and Latin American enterprise markets, Eric Benhamou, chairman and chief executive officer of 3Com, said. Despite that, Benhamou said the quarterly results were "strong".

The results were consistent with a profit warning 3Com issued March 2.

Sales of systems products increased 28 per cent from a year ago, to $703.9 million, and comprised 50 per cent of total sales. The remaining revenue came from sales of modems and other client access products, which increased 1 per cent from the year-ago quarter, to $706.6 million, 3Com said.

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