The networking company's shares fell to 37-1/2, down over 13 points from Friday's close of 50-3/4.
3Com said it expects to report earnings in the range of 40 to 50 cents a share, compared to 42 cents last year. Analysts had expected the company to report earnings of 60 cents a share.
Meanwhile, 3Com expects to report revenues of $770 million to $810 million for its third quarter ending February 28, up from $606 million for the same quarter a year earlier. Analysts attribute the earnings decline and stock drop to a price war Intel has launched against 3Com over the company's adapter cards.
"Intel cut prices on adapter cards by 44 percent and 3Com matched it, which is taking $30 million off of revenue and profits," said Bert Hochfeld, an analyst with Josephthal Lyon & Ross.
He explained that the distribution channels were backed up with products, which reduced the demand from those channels during the quarter. As a result, the high inventory caused a slowdown in revenues generated from those channels.
"[The second quarter] was a huge quarter of selling into distribution channels. Now, 3Com distributors are overstocked," Hochfeld said.
Although the company's expected revenue range is up over a year ago, it's a slowdown from record revenues of $820.3 million reported in the previous quarter.