3Com's stock dropped 12 per cent at the close of trading on Tuesday after the company announced it would not meet Wall Street expectations for its fiscal third quarter, which ended February 26.
The networking vendor said it expects earnings to be 23 cents per share on sales of $1.410 to $1.415 billion. Wall Street expected earnings of 36 cents per share. 3Com stock dropped almost four points, from $30.69 to $27.00.
"Our seasonally weak third quarter was exacerbated by several factors," said Eric Benhamou, 3Com's chairman and CEO. "An unexpected slowdown in the US and Latin American enterprise markets, a weakness in the traditional two-tier distribution channel, and lower than expected PC OEM sales all contributed to third quarter results."
Benhamou also said 3Com had to curtail the rate of product shipments into the channel.
The third-quarter results, however, reflect improved year-over-year results. 3Com posted sales of $1.25 billion and net income of 2 cents per share in its fiscal 1998 third quarter.
The company expects to complete 1999 third-quarter results on or about March 23, 1999.