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3Com 1Q net drops 49%
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September 22, 1998: 6:03 p.m. ET
Networking firm feels effects of price cuts but beats Wall Street estimates
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NEW YORK (CNNfn) - Networking company 3Com Corp., hurt by price cuts on computer modems and PC connector cards, reported a 49-percent decline in first-quarter profits.
For the quarter ended Aug. 28, the Santa Clara, Calif.-based company said net income (excluding a $10.2 million pretax credit) dropped to $86.7 million, or 24 cents a share.
Analysts had a consensus estimate of 20 cents a share, according to First Call.
In the year-ago quarter, 3Com recorded net losses of $51.2 million, or 15 cents a share. However, that included a $269.8 million charge for its acquisition of U.S. Robotics. Excluding the charge, net income totaled $169.6 million, or 47 cents.
Revenues fell 12 percent to $1.4 billion from $1.6 billion.
The second-largest networking company, slashed prices on its telephone modems earlier in the summer as a new technology standard was delayed. The company also cut prices on its network interface cards (NICs), which link PCs in networks.
Continued expense management and operational focus drove gross margin and operating income toward our long-term financial model," said Eric Benhamou, 3Com chairman and chief executive.
Shares of 3Com (COMS), which rose 5/16 to 32-3/8 in New York, climbed to 33-3/4 in after-hours trading.
-- from staff and wire reports
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