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3Com tries to reverse fortunes with unified switch

Do or die

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Opinion Is it good news that 3Com is making a serious challenge to Cisco and Airespace in the WLAN part of the networking business? Nobody seems to think so, not even 3Com, because, when asked why the share price shot up at the weekend, a spokesman said: "It would be silly to guess why [3Com] stock goes up or down a few points on any given day."

That the stock went up isn't debatable. Guessing why isn't "silly", it's a serious question, because it certainly can't be the company's financial position or its sales performance. Could it be the technology?

That, say commenters, would be a surprise. My own response to the announcement of "the industry's first unified switch for small and medium businesses (SMBs) that converges wired and wireless networking functionality and includes Power over Ethernet (PoE) to support Voice over Internet Protocol (VoIP) telephony on a single platform" was considerable scepticism.

I wasn't alone. Manek Dubash's Network Weekly newsletter pointed out caustically: "The IT industry is littered with companies who've tried to come back from near-death. Few have made it."

He went on to speculate: "It's as if there's a time and a place for a company and its products and, if it doesn't succeed in dominating its target market within a couple of years, it's either toast, or bought. Die or be eaten, is the rule for all but the fortunate few."

And I have to echo his scepticism when he goes on to suggest that Britain's Conservative Party is more likely to come back from the dead: "[3Com] has launched a new switch that has the look of a do or die effort. Can it save 3Com? It seems unlikely...your money's probably safer with the Tories than with 3Com."

It's only two weeks since Reuters assured us that 3Com shares would collapse because it had missed its predicted targets. Results "missed analysts' estimates and its shares fell nearly four per cent in after-hours trading", according to a story last month.

So Network World had no hesitation in saying that: "The jump was triggered by a report from UBS stock analyst Long Jiang that indicated 3Com's recent efforts to shore up majority ownership in its joint venture with Chinese equipment maker Huawei could make the network company more valuable. 3Com has a 51 per cent joint venture stake in the Chinese company."

Apart from Hu Are We (a Chinese telco-providing giant of indeterminate mass) what assets does 3Com actually have? It did buy Tipping Point, an excellent and innovative outfit, and it did actually make Tipping Point's founder Marc Willebeeck-LeMair CTO.

Marc's a bright lad, and an obvious star; but despite his obvious innovative outlook - Tipping Point has always impressed as a brilliant bit of intrusion-protection technology, brilliantly marketed - it's hard to believe that he can turn the lumbering dinosaur around, or that the financial institutions have suddenly woken up to his potential, a year or so after his appointment, but only two weeks after writing shares down for under-performance. Financial institutions don't make that sort of call.

Everybody has a 3Com story to tell from the last decade.

Nobody who was a fan of Palm Computing - sold first to US Robotics, and then snapped up as a cash cow by 3Com when they bought the modem/networking management company - will say anything kind about the company which turned a brilliant pioneer in mobile technology into a washed up relic of the past, using Microsoft technology to extend its life.

In mainstream networking, 3Com resold Trapeze technology, thus garnering some of the few words of praise you'll be able to find recorded about the corporation recently.

But now, say observers, it's going to be taken private. Hang on to your shares! - they may be worth more than you think, says the investor community.

But when the asset strippers have exposed the naked truth of what 3Com actually amounts to as a corporation, will anybody invest in it? Or is Marc about to get a chance to re-acquire Tipping Point, the company he originally started, for a nominal buy-back fee, and an opportunity to go back to the venture community who did so well out of him before, and sell the whole thing to Cisco after all? ®

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