Posts for Ticker ‘3Com’

3Com Stumped by CIFIUS (COMS)

3Com Corp. (NASDAQ: COMS) has announced this morning that the company along with affiliates of Bain Capital Partners, LLC and Huawei Technologies have withdrawn their joint filing to CIFIUS, the Committee on Foreign Investment in the United States, regarding its proposed merger transaction.

While the company said it was disappointed that it was unable to reach a mitigation agreement with CIFIUS for securing merger approval, the parties remain committed to continuing discussions.  3Com’s board of directors approved the merger back on September 28, 2007.  It looks like 3Com is going to have to go back to basics and focus on its own business plan for the time being. 

Bain had already offered up a unit of the company to secure approval in a move that might have ultimately lowered the price shareholders were set to receive, and the new range would have been $4.50 to $5.00 rather than the original $5.30 per share buyout terms.

After that disclosure yesterday, 3Com shares fell from over $4.00 down to under $3.80.  Last Thursday shares were as high as $4.20 and shares were almost up at $5.00 when the merger was announced.  Shares are halted in pre-market trading.

UPDATE: at 9:08 AM EST, 3COM shares are trading down 15% at $3.15, which will be a new 52-week low.  Its 52-week trading range is $3.22 to $5.11.

 

Jon C. Ogg
February 20, 2008

Posted on: February 20, 2008 – 8:53 am in Mergers and Buy Outs, Technology Companies, , , ,

3Com Mixed Results For Bulls & Bears; Still Hopes For Merger Approval (COMS)

3Com Corp. (NASDAQ: COMS) posted what may be one of its last quarterly financial results for its fiscal second quarter ended November 30, 2007:

  • The company posted earnings with non-GAAP net income was $13.0 million, or $0.03 per diluted share on a non-GAAP basis, compared with net income of $7.8 million, or $0.02 per share, for the second quarter of fiscal year 2007.
  • On a GAAP basis, 3Com’s net loss in the quarter was $35.6 million, or -$0.09 per share. 
  • Revenue in the quarter was $317.8 million compared to revenue of $333.0 million in the year before period. 
  • First Call had non-GAAP estimates at $0.02 EPS and revenues pegged at $326.8 million. So it beat slightly on non-GAAP earnings but revenues were light.

The net loss increase was listed as being primarily tied to purchase accounting related to the acquisition of Huawei’s 49 percent ownership of H3C.  In its second quarter, 3Com generated $6.4 million in cash from operations.

The company is noting its merger progress, sort of.  3Com and affiliates of Bain Capital (and Huawei) continue to work together towards closing the previously announced proposed acquisition of the company. The transaction is expected to be completed by the first quarter of calendar year 2008, subject to receipt of 3Com shareholder approval, customary regulatory approvals and other customary closing conditions.  We had featured this as a company that management couldn’t fix, so it needs the merger.

If those revenues stay soft there, you’d wonder if Bain & Huawei want those regulatory approvals to go through.  We have 3Com under review for our next "10 Stocks Under $10" weekly subscriber newsletter.

Shares are actually up marginally by under 1% at $4.45 in after-hours trading after closing up 0.5% at $4.42 today.   With a $5.30 buyout there is still a 19% merger-arb spread on this deal, so there is still a perceived risk that the deal could get blocked.

Jon C. Ogg
December 19, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he produces the SPECIAL SITUATION newsletter and he does not own securities in the companies he covers.

Posted on: December 19, 2007 – 5:12 pm in Earnings, Mergers and Buy Outs, Technology Companies, , ,

3Com Bailout Confirmed (COMS, NT, CSCO, JNPR)

3Com did confirm the reports of a $2.2 Billion buyout from Bain and Huawei this morning at $5.30 per share.  Why $5.30?  It wasn’t based on the stellar valuation nor was the price on its great hope.  It gets it right above the 52-week high of $5.24 and makes most of the holders who bought shares in the last 3-years a profit if they still held.  Sure there are shareholders buried from prior years, but the "long and wrong" crowd won’t be able to stop this from happening.

We’ve felt so sorry for this company when you look at its history that it is almost going to be a joy not having to cover 3Com anymore.  Management couldn’t fix this on its own, so maybe the private equity and Chinese can.

This will be a more formidable competitor than it has been now that it is in more capable hands.  It won’t be able to completely unseat the giants, but there is a slight impact.  Cisco Systems (NASDAQ:CSCO) is down 0.4% at $33.08 after briefly hittting new highs and Juniper Networks (NASDAQ:JNPR) is down marginally.  The industry dog Nortel Networks (NYSE:NT) is actually up almost 3% today, and you have to wonder if the Canadians hope a bailout is coming their way too.

Jon C. Ogg
September 28, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he produces the Special Situation Investing Newsletter and does not own securities in the companies he covers.

Posted on: September 28, 2007 – 9:30 am in Mergers and Buy Outs, , , , , , ,

3Com’s Rescue Plan….A Sale (COMS)

3Com (NASDAQ:COMS) may be a long-standing disaster story on its own, but shares are up 30% pre-market.  The Wall Street Journal has reported that 3Com is about to be acquired by private equity firm Bain Capital and Cinese equipment maker Huawei for more than $2 Billion.  This will reach more than $5.00 per share if the reports are accurate, representing more than a 50% premium. 

Shares of COMS were halted at 8:06 AM EST up 32% at $4.88 in pre-market activity and had traded 1.44 million shares.  This is one of those stocks that we had featured as one that management couldn’t fix.  Maybe private equity and the Chinese can.

Jon C. Ogg
September 28, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he produces the Special Situation Investing Newsletter and does not own securities in the companies he covers.

Posted on: September 28, 2007 – 7:31 am in Mergers and Buy Outs, Rumors, Technology Companies, , , ,

3COM Seemed Good, But… (COMS)

3Com Corp. (NASDAQ:COMS) posted a net loss of $18.7 million, or -$0.05 EPS, but on a non-GAAP basis outside of restructuring costs it made $12.2 million, or $0.03 EPS.  Analysts were expectingg $0.02.  Revenue rose to $319.4 million, above the $300.1 million a year ago and slightly above analyst estimates of $318.3 million.

Shares closed up almost 4% today at $3.74.  We didn’t get to listen to this conference call, but shares are giving back the gains in after-hours with shares down close to 5% at $3.57.  The 52-week trading range is $3.24 to $5.24.  Since we didn’t get to hear what the sell-of was about we won’t speculate as this is a small company now.  But here are some points investors should consider:

If we get a chance, we’ll look further into this one later.

Jon C. Ogg
September 20, 2007

Posted on: September 20, 2007 – 6:15 pm in Earnings, Technology Companies, , ,