3Com Reports Fiscal Third Quarter Results in Line with Reduced Expectations

SANTA CLARA, Calif., March 22 – 3Com Corp. reported financial results for its third fiscal quarter ended March 2, 2001 and announced actions intended to return the company to profitability and prepare it for growth.
    Citing the slowing economy as a reason for lower demand, 3Com reported that revenues for the quarter were $629.6 million, representing an 18 percent decline from ongoing revenues of $766.7 million in the prior quarter. Pro forma operating loss was $222.8 million. Pro forma net loss was $122.8 million or $0.36 per share. These results were slightly better than the preliminary estimates provided on February 28, 2001.
    3Com said earnings were affected by the lower than expected revenues, exacerbated by four additional factors: a shift in demand to lower-margin commercial access products; eroding prices and margins for consumer broadband modem business; higher unit costs attributable to fixed manufacturing charges being spread across lower production volumes; and higher provisions for excess/obsolete inventory due to the reduced demand.
    3Com will restructure its operations in order to increase focus on core markets and improve financial returns, the company said. The company has announced its intent to generate ongoing annual savings of $1 billion by the end of the coming fiscal year.