3Com Kills Consumer Line to Save Money

3Com on Wednesday announced its third-quarter financials, revealing revenue and income numbers that are down for the second consecutive quarter. Partly as a result, the company says it will dump its consumer Internet appliance business in order to cut costs.

3Com took in revenue of $629.6 million in the third quarter, down 18 percent from the $766.7 million it made in its fiscal second quarter. The company also reports a net loss of $246 million, and a pro forma net loss (which excludes restructuring charges and nonrecurring costs) of $122.8 million.

The pro forma loss numbers are slightly better than the $135 million to $145 million 3Com projected when it gave a warning about its third-quarter financials at the end of February. 3Com had projected to make $725 million to $750 million in third-quarter revenue before its earnings warning.

Offing Appliances Saves $250 Million

As a result of the poor financial performance, the company will continue to restructure itself in order to save $1 billion by the end of the next fiscal year, says Bruce Claflin, chief executive officer. After laying off 1200 employees in February, 3Com says it will save $250 million. 3Com expects to save another $250 million by discontinuing its consumer Internet appliance business, which includes the Audrey home Internet appliance and the Kerbango Internet radio. The company also plans to save another $500 million by "substantially improving the use of human, financial, and physical assets."

3Com's commercial sales, including LAN/WAN infrastructure products, dipped 18 percent from its second quarter, while its consumer sales came in at $73.5 million, down 14 percent from the previous quarter. CommWorks, 3Com's carrier business that was spun off as a wholly owned subsidiary in December, reported a 19 percent revenue drop, taking in $76.8 million.