3Com takes $19m hit on stuffed Euro inventories
An extra 1,000 staff get the bullet
3Com is canning 1,000 more staffers than it thought it would when it launched its restructuring plans last year. So its Q1 losses have quadrupled but the cost cutting is going well.
The total job cull is going to be 6,000 since November 2000, half of its workforce.
For the quarter ended 31 August 3Com said its loss widened to $132 million, excluding one off charges, from a pro forma loss of $41.3 million in the quarter a year earlier.
Including job cutting and other restructuring charges - like leaving the fledgling Internet appliance business and the consumer broadband-modem business, and taking a $19 million hit on European inventory problems - the loss was $232.4 million compared with $59.2 million a year earlier.
3Com Q1 sales fell to $390 million - they'd been $468 million in the previous quarter and $933.7 million in Q1 a year earlier.
Bruce Claflin, 3Com presidente and CEO, said: "3Com made solid progress during the first quarter of its fiscal year. It finished ahead of plan for expense reductions and cash. 3Com demonstrated meaningful margin improvement, and while revenue was below plan, there were some encouraging signs."
3COM's CommWorks, the unit that targets the telecom sector matched the previous quarter by generating $59.4 million dollars in revenue.
The Business Networks Company, which serves the enterprise market, generated $195 million of revenue. This missed internal targets but the stackable product line grew 18% sequentially, led by interest in recently announced Gigabit Ethernet products.
3Com's business connectivity company, which sells access products such as PC Cards and NICs to PC OEMs and enterprise customers, suffered because of reduced average selling prices, and inventory issues. In the past quarter 3Com reduced the unit's channel inventories by approximately $25 million, most of which was in Europe, and also took extraordinary charges of close to $19 million associated with the elimination of surplus inventories. ®