3Com yesterday warned that Q2 earnings will come in below expectations. For the quarter ending November 26, the networking firm expects sales of $149m - $153m, compared to earlier forecasts of $170m - $180m.

Increased competition from Cisco at the telco end of 3Com's product range and Dell at the lower end is having an adverse effect on its business. 3Com's gross margins are expected to be about 35 per cent, compared to prior guidance of around 38 per cent.

Reduced revenues will result in a net loss of between $0.12 to $0.14 per share. That works out at losses of between approximately $44m and $54m. 3Com will announce results for Q205 after the market closes on December 16. ®

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