Quantcast
PCWorld.com is upgrading some back-end systems. Some site features, such as user registration, may be temporarily unavailable.

3Com Kills Consumer Line to Save Money

Revenue loss prompts 3Com to drop Audrey, Kerbango, and other Internet appliance plans.

Phil Hochmuth, Network World

  • 0 Yes
  • 0 No

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.

For more information about enterprise networking, go to NetworkWorld. Story copyright 2008 Network World Inc. All rights reserved.

  • Recommend this story?
  • 0 Yes
    0 No
 

Featured APC Accessories

  • APC Back-UPS ES Safeguards your equipment from damaging surges and spikes that travel along your utility & data lines.
  • APC SurgeArrest Performance Highest level of protection for your professional computers, electronics and connected devices, as well as provides surge protection.

People who read this also read:

Sponsored Links