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3Com Q4 results up tenfold

But still disappointing, said company execs

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3Com yesterday recorded a tenfold increase in profitability when it posted its Q3 1999 results, a figure that matched the company's warning, made earlier this month, that profits would be down. Revenue for the quarter, which ended on 26 February, was $1.411 billion, up 13 per cent on the same period last year. 3Com posted a quarterly profit of $89.6 million, well up on the $7.4 million it made in Q3 98. The company's profit figure includes a $7.3 million credit related to "changes in previously recorded merger and restructuring expenses", balanced by $7.1 million charge for its acquisition of Smartcode Technologie and assets of ICS Networking. Despite the increase in sales and profitability, 3Com COO Bruce Chaflin still described the results as disappointing. "The question is not whether we are improving [the company clearly is, after all], but are we improving at the rate that was expected?" he said. Hitting 3Com's ability to improve quickly enough was a major downturn in sales of client access products such as modems and NICs. These products accounted for half of the company's sales, but the money it made from those sales increased just one percentage point on Q3 98. Sales of its higher-end systems products increased 28 per cent. Sales of 3Com's high-profile Palm products were down too, but that was expected, claimed Chaflin, because of the strong sales recorded in the run-up to Christmas. 3Com CFO Christopher Paisley said that the company was expecting to post better results next time. "Q4 is a historically strong quarter for 3Com. We expect that to be the case this year," he said. However, he warned that it might not be enough to put 3Com back where it would have been had Q3 been better. "Sequential sales growth in Q4 will be modest this year," he predicted. ®

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