3Com Corp. said Monday that it will lay off 1,200 workers, or 13% of its workforce, in an effort to cut costs as the network equipment maker restructures because of a slowing demand for telecommunications products.
President and CEO Bruce Claflin said the workforce reduction is the first step in the company's "global cost-reduction initiative," which he revealed in December. The company says it will reduce costs in four areas: employment; discretionary costs; product costs; and plant, property, and equipment savings. The job cuts will affect full-time and "alternative" employees.
Lauri Vickers, senior analyst at Cahners In-Stat Group, says the job cuts are a result of the company's previously announced plan to switch its focus from high-end networking equipment to more consumer-based markets, including Internet appliances and home networking. "But none of those areas are taking off yet," Vickers says. 3Com is in "a holding pattern to see if those seedlings will take off for them."
But Rich Ptak, Hurwitz Group VP of E-business infrastructure strategies, believes "we are at the verge of an explosion in telecommunications, the Internet, and E-business industries." Says Ptak: "I see this as a pause to catch one's breath."