3Com sees weaker 4Q

June 7, 2001
Web posted at: 2045 GMT

NEW YORK (CNNfn) -- Computer networking equipment maker 3Com Corp. said Thursday its fiscal fourth-quarter revenue will fall short of Wall Street expectations, blaming sluggish demand and a glut of excess inventory.

The Santa Clara, Calif.-based company, which makes products such as modems and network interface cards, said it expects to report revenue for the quarter ended June 1 of between $450 million and $475 million.

Wall Street analysts expected revenue of $575 million, according to earnings tracker First Call.

The company said weaker-than-expected sales led to increased provisions for excess inventories.

That, combined with one-time charges related to restructuring efforts, will result in negative gross margins, the company said. It did not provide a per-share earnings estimate. The most recent consensus estimate of analysts polled by First Call was for the company to lose 45 cents per share during the quarter.

3Com also said Thursday it will discontinue its line of consumer cable and digital subscriber line (DSL) modems, part of an effort to shed unprofitable businesses.

The company has spent much of the year trying to restructure itself to survive weak demand during an economic slowdown in the U.S., slashing thousands of jobs in the process.

"Business conditions worsened in 3Com's fourth quarter," said 3Com chief executive officer Bruce Claflin. "However, 3Com is taking the steps necessary to achieve future profitability in this unfavorable climate."

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