3Com: Turnaround Depends on IBM Deal

3Com (COMS) reported a narrow quarterly loss on March 22, but the bigger story is the company's blossoming partnership with IBM (IBM). I hear that that within a few days IBM and 3Com will announce that they're ready to ship an integrated IP telephony server with email, messaging and other business software.

I usually doesn't get distracted by features and functions, but 3Com and IBM are delivering a pretty nifty list of capabilities. It's all very impressive stuff. But again, there's a much bigger story here. While many vendors claim to be partnering on unified communications, IBM and 3Com are delivering the goods.

The unified communications push is the latest indication that 3Com may be turning around its business. I wrote in December that 3Com was among the 50 worst performing stocks of the past 10 years. Ouch. Anybody else remember when Palm (PALM) was the hot property within 3Com's crumbling empire? Now, it may actually be 3Com that shows greater strength heading into 2008.

Still, I am getting ahead of myself. 3Com isn't profitable yet and its stock is near a 52-week low. Big rivals like Cisco (CSCO) and Nortel (NT) may dominate the news in the weeks ahead. And that open source voice over IP system, called Asterisk, has reached its tipping point. But instead of ignoring such threats, 3Com appears ready to embrace them. In fact, I hear that 3Com plans to address the Asterisk market within the next few months.

In the meantime, 3Com can speed dial IBM for plenty of help in the unified communications market.

COMS 1-yr chart

Disclosure: Author has no position in the above-mentioned securities.