(FORTUNE Magazine) – In the world of network-equipment makers, 3Com (COMS, $8) has never been much more than a second-tier player with an underperforming stock. Even at the height of the tech bubble--when 3Com spun off its one hit product, Palm--the company lagged behind its peers. Shares rose just 20% from early 1996 to the market peak in 2000, vs. a 1,700% gain for rival Cisco. Since then, business has looked ever bleaker. The company hasn't come anywhere near a profit in three years, and it recently reported quarterly revenues that were down 33% from the year before.

So why do value investors suddenly love this stock? First, there's a degree of protection. The nearly $4 a share in cash that 3Com has should act as a collar against any serious declines. Second, there's the potential for something big. In November, 3Com launched a joint venture with Huawei Technologies, the leading Chinese networking company, with $3.5 billion in annual sales. The deal lets 3Com market Huawei's products globally and sell 3Com equipment in China. Analysts say the deal could could make 3Com the low-cost alternative to Cisco.

That sentiment is gaining traction. Bob Olstein of the respected Olstein Financial Alert fund, for example, recently purchased 1.5 million 3Com shares. "I'm still not a big fan of 3Com," admits Olstein's co-manager and in-house tech expert, Sean Reidy. "But with IT budgets expected to remain low, 3Com could gain some serious appeal."

--David Rynecki