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3Com profits skyrocket

3Com posts a dramatic rise in profits in its fiscal second quarter, as strong sales helped the networking company outperform Wall Street expectations.

3Com (COMS) posted a dramatic rise in profits in its fiscal second quarter which ended November 30, as strong sales helped the networking company outperform Wall Street expectations.

Net income rose to $105.6 million, or 56 cents a share for the quarter, up from $16.4 million, or 9 cents a share for the same period a year ago.

The results include a one-time charge of $6.6 million related to the acquisition of OnStream Networks, a supplier of Asynchronous Transfer Mode products. Excluding the charge, 3Com would have posted $112.2 million, or 60 cents a share, in net income, a six-fold increase from the year-ago quarter.

With and without the charge, the Santa Clara, California-based producer of networking hardware beat Wall Street's estimate. A consensus estimate by First Call predicted the company's earnings would rise by 55 cents a share.

For the six months that ended November 30, 3Com saw net income of $197.1 million, up dramatically from $73.8 million a year ago.

The company said sales fueled growth; they rose 46 percent in the quarter to reach $820.3 million, compared to $563.5 million for the quarter that ended November 30, 1995. 3Com posted sales of $1.5 billion for the first half of its fiscal 1997, up about a third from $1 billion in sales for the first six months of its fiscal 1996.

Network adapter sales were strongest, growing by 55 percent in the quarter, while systems products such as switches, hubs, internetworking, and remote access tools saw 41 percent growth, the company said.