3Com Trades Lower on Disappointing Guidance

3Com Corporation reported a fiscal Q1 net loss of $18.7 million, or $0.05/share, compared to a loss of $14.1M, or $0.04/share last year. Excluding items, EPS totaled $0.03 (vs. $0.01 last year), a penny better than analysts' average estimate. Revenue growth of 6.4% to $319.4M, came in slightly ahead of estimates of $318.3M. "Revenue in all three business units showed year-over-year growth, including our traditional data and voice business, which achieved positive growth for the first time in almost two years," commented CEO Edgar Masri. However, 3Com's Q2 adjusted EPS guidance of $0.01 to $0.03, disappointed investors, as analysts had forecasted $0.03 (Thomson) to $0.04 (Bloomberg), on average. CEO Masri said the integrating of now wholly-owned Chinese joint-venture Huawei-3Com has been a "distraction" (see full earnings call transcript summary later). Shares of 3Com rose 3.9% to $3.74 during normal trading Thursday, but fell 5.1% to $3.55 in after-hours activity following its earnings release.

Sources: Press release, Bloomberg
Commentary: 3Com, Sonus And Tellabs: Possible Nortel Targets • Nortel Has 3Com In Its Sites • 3Com Upgraded On Possible Sale Of The Company
Stocks/ETFs to watch: COMS. Competitors: CSCO, NTGR, NT, AV

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