3Com Lowers Expectations For 2Q - InformationWeek

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3Com Lowers Expectations For 2Q

The news comes as the company makes a late entry into the market for 10-Gbit switches.

3Com Corp.'s second fiscal quarter will fall short of expectations. Gross margins will be 35%, as opposed to the 38% predicted by the company in September, execs say.

3Com's net loss per share will be 12 to 14 cents. While it wasn't immediately clear if that range had been revised, too, it would be an improvement over the second quarter of fiscal 2004, when the company suffered a loss of 37 cents a share.

Revenue for the quarter ended Nov. 26 is expected to be $149 million to $153 million. The September guidance predicted revenue of $170 million to $180 million.

Expenses are expected to around $95 million, which matches guidance offered in September. The whole picture should become clearer Dec. 16, when the company formally discloses how the second quarter turned out.

3Com has been trying to get back into the market for big businesses. Last month, it introduced a 10-Gbit switch with a 1.44-terabit back plane. That said, experts believe it's behind a slew of companies, including Cisco Systems, Enterasys, Extreme Networks, Force-10, and Foundry Networks, in that market.

While it's behind the pack with a 10-Gbit switch, companies are starting to consider switches in that league. Prices are falling, which can work against a vendor, but they also are the deciding factor for many business-technology execs looking to buy. That builds volume for a company like 3Com.

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