3Com Q3 losses are less than expected

3Com's losses for the third quarter of fiscal 2002 were slightly less than expected, as the network vendor continues to struggle back to profitability.

3Com this week reported a loss before charges of US$42 million, or 12 cents per share, compared to its third quarter 2001 precharge loss of 128.8 million, or 36 cents per share. Analysts had predicted 3Com's precharge, or "pro forma," losses to be between 14 and 16 cents per share.

The company credits the slight improvement to cost-cutting measures taken over the last year, which have resulted in a 30 percent drop in operating expenses since the third quarter of 2001 and a staff reduction of 5,200 throughout last year. The company said in January that it plans to trim 500 more positions.

Overall, 3Com attributes poor market conditions in the enterprise switching and carrier equipment markets for the company's lack of profits.

3Com took in $356 million in revenue last quarter, down 10 percent from the previous quarter, and down 43 percent from the $629.6 million it made a year ago. Revenue was down 1 percent for 3Com's Business Networks Unit, or enterprise equipment arm, while its CommWorks carrier division and Business Connectivity group (which includes network interface cards and wireless gear) fared worse, with revenues for both units down 19 percent from the previous quarter. On a net basis, the company lost $236 million, or 67 cents per share after charges, compared with its loss of $246 million, or 72 cents-a-share, the year before.

3Com has set a goal of reaching profitability by the end of its fourth fiscal quarter, although CEO Bruce Claflin did not make any promises during a conference call with investors. Some market watchers give 3Com a 50-50 chance of making its fourth-quarter pre-charges profitability goal.

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