3Com Investors Brace For Earnings & Guidance (COMS)

3com_logo3Com Corporation (NASDAQ: COMS) is one of the few tech stocks to report earnings after today’s close.  The troubled maker of routing and communication equipment is expected to post $0.06 EPS on $337.12 million in revenue. The company raised its guidance back in early August, although it was from business in China and that is still expected to wind down.

It forecast quarterly revenue of $335 million to $340 million ($10million higher than before) on higher Chinese sales.  3Com did note sales to Huaweias a percentage of its total revenue will continue declining.  Its non-GAAP EPS was seen at $0.06 to $0.08. 3Com expects to end the quarterwith about $530 million in cash.

If it offers guidance, estimates for next quarter are $0.04 non-GAAP EPS and about $320.7 million in revenue.

Options pricing offers no real insight and its shares are too close to lows to make any heroic calls on the chart. The number of analysts thatfollow the stock has shrunk to a mere handful and its market cap isbarely $822 million.  With a $2.03 share price after this morning’snear-3% drop, its 52-week trading range is $1.76 to $5.11. Its conference call is scheduled for 5:00 PM EST, although we’d expect there to be very few analysts in the Q&A.

3Com currently has a fairly high short interest of 21.2 million shares, although that number has declined from more than 31.2 millionshares since mid-July.  Unfortunately, it seems that themore time goes by the less and less the investment community caresabout 3Com.  Now that the old private equity and Huawei deal aregone, 3Com has shrunk to the point that its earnings have zero impact onthe other communications and routing equipment players such as Cisco, Juniper and Nortel.

Jon C. Ogg
September 22, 2008

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