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3Com to cut 3,000 jobs

The embattled networking company cuts 30 percent of its staff in an effort to save $1 billion.

Networking equipment maker 3Com on Monday said it would cut its work force by 3,000 people, or 30 percent, in an effort to trim costs by $1 billion.

The announcement was expected. On Friday, some 3Com employees were told by their managers to expect layoffs Monday morning.

The Santa Clara, Calif.-based company currently employs about 10,000 workers.

Shares in 3Com rose 19 cents, or 2.75 percent, to $7.09 in morning trading. In the past year, 3Com has traded as high as $75 and as low as $4.44.

The layoffs are part of 3Com's effort to return to profitability. The plan includes implementing a cost-cutting program, which was announced in March, targeted to save $1 billion annually. Also, 3Com is reorganizing its business units to become more focused on the company's core products and to build better customer relations.

Like other technology companies, 3Com has been hit hard by the economic slowdown as sales of equipment to telecommunications carriers and business customers sag. Both Cisco Systems and Nortel Networks, competitors of 3Com, have also trimmed their work forces.

3Com has been continually restructuring the past two years and earlier this year made some cost-cutting measures. This spring the company laid off 1,200 employees and closed down its consumer business, which included its Audrey Web-surfing appliance and Kerbango Internet radio.

Analysts say the cuts aren't surprising. "This is par for the course. They are going back to basics," said Forrester Research analyst Galen Schreck. "No more gambles left at 3Com. It's the right thing to do. They are living their simplicity message externally and internally."

For the past month, 3Com employees have been bracing themselves for the latest round of layoffs. To reach its goal of $1 billion in cost savings, 3Com is cutting expenses such as travel, and plans to decide what to do with excess office space.

But no matter what, the company needed to lay off more employees, 3Com's Johnson said two weeks ago. He also said that company executives had been meeting to decide what products and which of the remaining 8,400 employees they would keep.

Chief Executive Bruce Claflin is planning a special forum to discuss 3Com's future with employees May 17, according to an internal memo Claflin sent to employees two weeks ago.