3Com sends out positive signals

3Com's performance has sent the networking industry encouraging signs after the developer sustained favourable conditions.

For the quarter ended 27 November 1998, sales and profit were up sharply for the second fiscal quarter compared with the same period a year earlier.

Profit before merger-related charges increased 54 per cent from $86.7 million to $133.4 million, or 36 cents per share, for the quarter, beating analysts' expectations of 31 cents per share.

Sales jumped 29 per cent from $1.197 billion in the second fiscal quarter of 1997 to $1.54 billion in the second quarter of 1998. Sales of systems products rose 25 per cent year on year and client access products gained 33 per cent.

Eric Benhamou, chief executive of 3Com, said in a statement: 'Sustained favourable market conditions and operational management improvements were the drivers behind second-quarter growth.'

In the SME market, 3Com continued its drive to maximise channel coverage.

'We increased our small and midsized market reseller population to a record 67,000 resellers,' Benhamou said, adding that 16,000 of them had received formal training from 3Com during the quarter.

Benhamou expected emerging technologies such as internet and Lan telephony, storage area networking and home networking to drive growth over the next year.

The results included a charge of $74.7 million related to the acquisition of NetVantage, FlowPoint and DSLAM division of Ariel.

In a separate move, 3Com and Hewlett Packard announced an agreement to put 3Com's network interface cards and modem products in HP's entire line of PCs.

Benhamou said voice over IP and video streaming will begin broader deployments in 1999.