3Com cuts more than planned; results on target
3Com Corp.'s revenue dropped by $544 million since last year and the company will end its restructuring timeline with 1,000 fewer employees than expected, it says in its first-quarter results.
The telecom equipment provider also says it met or exceeded most of its key goals, including gross margin improvement, cost-cutting and the $145 billion cash balance it had at quarter's end.
3Com showed $390 million in revenue for the quarter — down significantly from $933 million a year ago, but only slightly down from $468 million in the previous quarter. Gross margins reached $63 million compared with $341 million a year ago, but that was up from last quarter's $169 million in losses.
Net loss was $232 million, or 67 cents a share — wider than $59 million, or 18 cents a share, a year ago, but narrower than Q4 2001's $518 million loss, at $1.52 a share.
Q1 also saw the first full quarter under the company's restructured format. 3Com is divided into telecom unit CommWorks, which generated $59.4 million in revenue; the Business Networks unit that drew $195 million from its targeted enterprise market; and the Business Connectivity unit, whose access products landed $125 million in Q1 revenue.
The company has cut its workforce steadily since its high of 12,000 in November to a planned 6,000 by the end of this November, or about 1,000 more cuts than planned.
3Com "finished ahead of plan for expense reductions and cash," says President and CEO Bruce Claflin. "The company also "demonstrated meaningful margin improvement, and while revenue was below plan, there were encouraging signs."
Claflin says that, barring any further economic changes, the company expects revenue to be flat or up modestly next quarter.