3Com profit lags behind Cisco Q1

Networking giant Cisco Systems has reported a first quarter turnover of $1.43 billion, claiming its sales are double that of its nearest rival 3Com.

Profit for the quarter ended 26 October was $180.9 million. That includes a $174.6 million charge for the acquisition of Telebit and a $55.1 million gain from a minority investment sale, compared with $181.4 million in the same period last year. Turnover leapt 80 per cent over the 1996 first quarter figure of $798.3 million.

3Com's first quarter sales were $707 million for the three months ended 31 August, and only overlap the Cisco quarter by one month.

But Paul Mountford, Cisco UK MD, said: '3Com is a long way behind us and the gap is widening. Our turnover for 1996 was $4.2 billion, compared with 3Com's $2.3 billion. Our market capitalisation is about $42 billion, compared with 3Com's of about $6 billion.

'Cisco offers more choice, better support and a more end-to-end story than 3Com. It has good technology, but it seems to concentrate on box-shifting rather than advice, support and solutions.'

Wall Street observers commented that Cisco is assuming a position in the network market similar to that of Microsoft in software - where it is so far ahead of its rivals that it can set standards and, to some extent, perpetuate its own success.

'We will never be so big that we lose contact with customers as we're well aware that 90 per cent of business comes from our existing base,' Mountford said.

Cisco showed growth in its three key markets: enterprise, service provider and SME business. This was the seventh successive quarter in which the company reported an increase in turnover and profit of well over 50 per cent