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3Com to lay off 1,200 workers

The networking company plans to trim its work force by about 10 percent in a cost-cutting move prompted by broader woes hitting the telecommunications market.

3Com will eliminate 1,200 jobs as part of a cost-cutting move, the company said Monday.

CEO Bruce Claflin said the cuts--which amount to about 10 percent of its work force, according to a company spokesman--are a reaction to broader woes hitting the telecommunications market.

"In light of the U.S. economic downturn and turmoil in the telecommunications industry, I announced in December a global cost-reduction initiative," Claflin said in a release. "3Com will focus all of its resources on work critical to market leadership and superior financial returns."

3Com makes networking equipment for telecommunications carriers, Internet service providers and consumers.

It?s hardly the first time the words "slowdown" and "networking" have been paired together. The entire sector has struggled with demand issues. Nortel Networks earlier this month cut earnings and revenue estimates and slashed its work force by 10,000. That news took much of the networking sector down. Before Nortel, Cisco Systems predicted lower sales growth.

Other companies that supply the telecommunications industry, including Motorola and Texas Instruments, have warned they would miss results as well.

3Com bested analysts? lowered expectations in its second quarter in December, posting a loss of $52.4 million, or 15 cents per share, on sales of $789.5 million.

The company said it would continue to focus on cost reductions in employment, discretionary costs, product costs and plant, property and equipment, although it did not outline specific measures.

3Com blamed the second-quarter loss on slowing sales of network equipment to telecom carriers and Internet service providers.

"Given all the restructurings going on there, it's not surprising. And also given the difficult industry environment," said Paul Sagawa, an analyst at Sanford Bernstein. "They?re not immune to all the problems; they?re just smaller--they can?t lay off 10,000."

3Com had announced plans to spin off its high-end carrier equipment business in December and recently completed the spinoffs of its Palm and U.S. Robotics businesses.