3Com to cut 30% of its jobs

Computer network maker to add 3,000 to 1,370 already fired

May 08, 2001|By BLOOMBERG NEWS

SANTA CLARA, Calif. - 3Com Corp. said yesterday that it will eliminate 3,000 jobs, or 30 percent of its work force, and may make other spending reductions as the maker of computer-networking equipment tries to become profitable in the next year.

3Com will trim its staff to 7,000 over several quarters, with about 25 percent of the cuts involving contract workers, spokesman Brian Johnson said. The moves are in addition to 1,200 firings 3Com announced in February and 170 more in March. The company said it also may prune product design and equipment expenses.

The company, which makes networking equipment for the consumer, commercial and carrier markets, is trying to save $1 billion annually after slower U.S. economic growth and lower spending by phone companies led to four straight quarterly losses.

3Com said it plans to become profitable again in fiscal 2002, which starts next month. The price of 3Com shares has fallen 23 percent since its first job cuts were unveiled Feb. 26.

The announcement "shows the determination 3Com has in righting the ship and getting costs in line with the current environment," said Peter Conrad, a senior analyst at Kopp Investment Advisors, which owns about 1 million 3Com shares. "When things turn up, these guys are in a position to show some nice profits."

Shares of 3Com fell 38 cents, or 5.5 percent, to $6.52 yesterday on the Nasdaq stock market.

Bigger rivals, Lucent Technologies Inc. and Cisco Systems Inc., also have trimmed their work forces as sales sagged.

Bruce L. Claflin, 3Com's chief executive, said in March that the company planned more firings but didn't say how many or when they would happen. The Wall Street Journal had reported earlier that 3Com would announce the layoffs as early as yesterday.

The company in March posted a fiscal third-quarter loss from operations of $148 million. Sales plunged 45 percent, and the company said revenue wouldn't rebound for at least three more quarters. Two days later, 3Com said it would shed 170 jobs at a unit that makes high-speed modems.

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