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The Santa Clara, California-based company, which is currently striving to return to profitability, said that its loss before charges in Q3 came to USD42 million, or USD0.12 a share. These figures for the quarter ending 01 March 2002 compare with a loss before charges of USD122.8 million, or USD0.36 a share for the same period ending in 2001.
The figures beat analysts' expectations, who according to Thomson Financial/First Call forecast a consensus loss excluding charges of USD0.16.
3Com's net loss was USD236 million, or USD0.67 a share, compared to a loss of USD246 million, or USD0.72 a share, a year earlier. But revenues also fell by 43.5 percent to USD356 million from USD629.6 million a year earlier and were also 10 percent lower than in the previous quarter. Sales were weakest in Europe, down 15 percent, and down nine percent and five percent in Asia and in the Americas respectively.
To reduce costs in 2001, the company slashed thousands of jobs, leaving it with a worldwide employee headcount of around 5,500 at the end of the 2001, compared to around 12,000 a year earlier. Furthermore in January 2002 3Com said it was cutting another 500 jobs globally.
In Ireland 3Com employs approximately 950 at a manufacturing base in Dublin and in a research and development facility in Galway. Throughout 2001 concerns persisted about major job losses or a total closure here, and worries increased in May when the company said it was cutting 3,000 jobs globally. In June 2001 the company said that around 100 jobs would be lost in Ireland.
The company's cost cutting regime seems to have paid off; in the third-quarter 3Com's operating expenses were around USD307 million, down a whopping 30 percent from USD439.2 million a year earlier.
"Our balance sheet remains strong with cash balances of USD1.37 billion," commented Bruce Claflin, 3Com president and chief executive officer. "Our working capital management continues to be solid with a cash-to-cash cycle of four days, the best in our company's history and the best of any major networking company."
But expensive mistakes over the last two years weigh heavily on 3Com still. In October 2000 the company launched Audrey, a consumer Web surfing device that consumers reacted poorly to. It was dumped less than year later and in June 2001 the firm also exited the high-speed modem business, another area where it had struggled.
3Com, which was the parent company of Palm until it spun the unit off in 2000, now focuses on wireless and Internet telephony networking equipment for telecom carriers and businesses.
For the company's fourth quarter, 3Com said it expects revenues to be in a range of down five percent to up five percent from the third quarter, and said it could not confirm when it would reach profitability. "For the near term, we do not look to improving market conditions to restore profitability; rather, it will be through disciplined cost and expense management," Claflin said.
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