Carrier loss bites into 3Com's turnover

Turnover for 3Com's second quarter ended 1 December fell five per cent on its previous quarter. Total turnover was $767m, down from $806.3m.

Turnover for 3Com's second quarter ended 1 December fell five per cent on its previous quarter. Total turnover was $767m, down from $806.3m.

UK managing director Adrian Hurel put the blame on the firm's networking carrier business. "If the carrier networking business results had been excluded, we would have seen company growth of five per cent," he said. Sales in the networking giant's carrier business declined by 43 per cent.

3Com's business is divided into the commercial and consumer unit, which accounted for $671m of turnover, and the carrier networking business, which generated $95.4m.

The slowdown in telecoms spending is affecting 3Com's carrier business as firms hold back investment, which in turn is distorting 3Com's results, said Hurel.

However, he expects an upturn as customer confidence in the telecoms sector increases. The carrier business suffers from unpredictable finances because of its tendency for large, one-off deals, he explained.

"Numbers are down on the quarter because some of our telco partners are restructuring. Projects which they scheduled for the last quarter will happen this quarter," he said, adding that most of 3Com's turnover and 90 per cent of its reseller partners are involved with the commercial and consumer unit, which was "stronger than ever".

Keith Fenner, technical adviser at service provider Accpac, agreed that problems are caused by the slowdown in telecoms earnings. "[Providers of telecoms hardware] are taking a hit because of the uncertainty surrounding the delivery of third-generation lines, and financial backers are shying away from investing in this sector," he said.