3Com banks on modem turn-up

Slow transition to V.90 leaves networking vendor down in the doldrums. Linda Leung and Wale Azeez report.

3Com has blamed a slow transition to the V.90 56-kilobit-per-secondms. Linda Leung and Wale Azeez report. modem technology standard for lacklustre turnover during its fourth quarter.

For its fourth quarter ended May 31, revenue was flat at $1.37 billion.

Net income increased by 52 per cent to $63.6 million, or 18 cents a share; analysts had been expecting 17 cents a share. The results also included a $8.4 million charge for 3Com's acquisition of network interface card supplier Lanworks Technology.

Eric Benhamou, 3Com chief executive officer, said: 'The V.90 transition has occurred more slowly than planned. It is occurring, but not at an exponential rate.'

He added that an acceleration of take-up was expected before the end of the year, predicting that 80 per cent to 90 per cent of ISPs and carriers will have upgraded to V.90 by the autumn.

However, Mike Valiant, marketing manager at 3Com, previously stated that the vendor had already begun to ship V.90 products back in February this year, when the standard was ratified, adding that he believed the market was then in a position to make progress (PC Dealer, 25 February).

Benhamou said the networking vendor's inventory woes were mostly solved and that some product sales were growing rapidly. 'We have turned the corner and begun to realise operating efficiencies and improved financial results.'

When 3Com acquired modem maker US Robotics last year, it was confronted by inventory and other problems, which resulted in a series of disappointing quarters.

Sales of systems products increased by eight per cent, but sales of network cards and modems fell by six per cent.