Palm sales give 3Com a helping hand

Profit warning as company plans restructure

3Com's shares eased three per cent as it issued a profits warning, saying that the success of the PalmPilot had failed to bolster falling sales of older products. The company also said it will buy back up to 15 million of its shares -- that’s about four per cent of the total outstanding. 3Com reported strong fourth quarter sales for corporate networking equipment and the PalmPilot handheld computer...and profits were slightly better than analysts expected. Profits were $88 million, against $65.9 million last time around. Q4 sales edged up three per cent year on year from $1.38 billion to $1.42 billion. However revenue from modems and connector cards is plummeting. And 3Com is not introducing products fast enough in the immediate future to replace the shortfall. 3Com CEO Eric Benhamou warned that even reorganising the company was unlikely to boost revenue growth into double figures for fiscal 2000. He predicted "flattish or even negative" sales for the first and second quarters, compared to the same periods last year. ®

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