Feeds

3Com profit bump surprises Street

Wrapping up a gift for HP

Providing a secure and efficient Helpdesk

Networking equipment maker 3Com beat its guidance for revenues and profits in its fiscal 2010 second quarter, but revenues are still being compressed by the soft global economy.

In the quarter ended November 27, 3Com posted sales of $322.2m, down 9.1 per cent compared to the year-ago period. The company said that it did see sequential revenue growth across all major geographies in the quarter, with a "solid recovery" in Europe and Latin America and "continued strong performance" in China. 3Com is ramping down its sales partnership with Huawei Technologies in China, with sales down 35.3 per cent to $18.2m in the quarter, while direct sales in China rose by 21.9 per cent to $151.1m. (Yes, if you do the math, 52.5 per cent of 3Com's sales come from China.)

Earnings in the quarter were impacted by HP's impending acquisition of 3Com, and the networking company said that it booked $4.6m in charges relating to the $2.7bn cash deal HP put on the table for 3Com shareholders back in early November. However, even with those charges, 3Com had a ruling from the taxman that added $10.8m to the coffers during the quarter and was able to nonetheless push net income up to $20m, a 55 per cent increase over the prior fiscal year's second quarter.

3Com generated $118.2m in cash from operations in the quarter, which HP will be keen on knowing about, and repaid $88m in debts. The company had $704.1m in cash and equivalents in the coffers as the quarter ended, and a mere $112m in debt. This means HP is really only shelling out $2.1bn for 3Com.

Of course, 3Com's sales have been stagnant at around $1.3bn for the past three fiscal years ended in May, and only went into the black in fiscal 2009, with $114.7m in net income against $1.32bn in revenues. The company lost $613.8m over the prior four years, with aggregate sales of just over $4bn during that time. Presumably HP is willing to pay such a high premium for 3Com today because that company has cleaned up its financial act. Plus, buying 3Com allows HP to bolster its share of networking sales, fill in product gaps, and get a solid footing in the Chinese market, where 3Com has a 30 per cent share for network equipment sales.

This isn't just Cisco envy - although that's also a big part of the HP buyout of 3Com, of course. ®

Beginner's guide to SSL certificates

More from The Register

next story
Scrapping the Human Rights Act: What about privacy and freedom of expression?
Justice minister's attack to destroy ability to challenge state
WHY did Sunday Mirror stoop to slurping selfies for smut sting?
Tabloid splashes, MP resigns - but there's a BIG copyright issue here
Google hits back at 'Dear Rupert' over search dominance claims
Choc Factory sniffs: 'We're not pirate-lovers - also, you publish The Sun'
EU to accuse Ireland of giving Apple an overly peachy tax deal – report
Probe expected to say single-digit rate was unlawful
Inequality increasing? BOLLOCKS! You heard me: 'Screw the 1%'
There's morality and then there's economics ...
Hey Brit taxpayers. You just spent £4m on Central London ‘innovation playground’
Catapult me a Mojito, I feel an Digital Innovation coming on
While you queued for an iPhone 6, Apple's Cook sold shares worth $35m
Right before the stock took a 3.8% dive amid bent and broken mobe drama
EU probes Google’s Android omerta again: Talk now, or else
Spill those Android secrets, or we’ll fine you
prev story

Whitepapers

Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Storage capacity and performance optimization at Mizuno USA
Mizuno USA turn to Tegile storage technology to solve both their SAN and backup issues.
The next step in data security
With recent increased privacy concerns and computers becoming more powerful, the chance of hackers being able to crack smaller-sized RSA keys increases.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.
A strategic approach to identity relationship management
ForgeRock commissioned Forrester to evaluate companies’ IAM practices and requirements when it comes to customer-facing scenarios versus employee-facing ones.