3Com posts smaller-than-expected loss in 4Q

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3Com topped analysts' estimates in its fourth quarter Tuesday but still posted a loss of $146.8 million, or 42 cents a share, on sales of $763.7 million.

A survey of analysts by First Call Corp. predicted the network-equipment maker would lose 44 cents a share in the quarter.

Ahead of the earnings report, 3Com (Nasdaq: COMS) shares closed off 1 11/16 to 48 11/16.

Last quarter, 3Com announced an ambitious restructuring plan that would result in an operating loss in the quarter.

This quarter's results also marks the first quarter it has not include the results from its Palm Inc. (Nasdaq: PALM) spin-off.

Company officials braced the Street for this quarter's lackluster results, predicting sales of between $675 million to $750 million and an operating loss of between $450 million to $500 million.

While the $763.7 million in sales was slightly above its previous estimate, it still represents a 38 percent decline from the year-ago quarter when it earned $88 million, or 24 cents a share, on sales of $1.23 billion.

The quarter's charges include a $64.2 million pre-tax charge related to business realignment costs, a $10.6 million pre-tax charge for purchased in-process technology, and a pre-tax gain of $89.0 million from gains on investments.

"3Com's fourth quarter sales and operating losses were better than we projected," said CEO Eric Benhamou in a prepared release. "Given the magnitude of the changes implemented during the quarter, I am encouraged by our results and the progress we made on our transformation milestones."

Chase H&Q analyst Erik Suppiger predicted 3Com would lose 55 cents a share on sales of $700 million.

Analysts had varying views on how 3Com would perform this quarter as loss estimates ranged from 28 cents a share to 60 cents a share.

In the fourth quarter, 3Com's sales of personal connectivity products such as network interface cards and broadband modems fell 26 percent from the year-ago quarter to $410 million.

Sales of its network systems products, which include hubs, switches and LAN telephony gizmos, fell 48 percent from the year-ago quarter to $353.7 million.

Last quarter, 3Com topped analysts' estimates, earning $97.4 million, or 27 cents a share, on sales of $1.4 billion.

Separately, 3Com said it would acquire Internet radio maker Kerbango Inc. for $80 million.

Company officials said the deal will be accounted for as a purchase and is scheduled to close during the first fiscal quarter. The company said that the acquisition is not expected to affect fiscal results for fiscal 2001.

3Com shares rallied up to a 52-week high of 119 3/4 in February ahead of the Palm initial public offering. Its shares fell to a low of 22 5/8 in August.

Fourteen of the 24 analysts following the stock rate it either a "buy" or "strong buy."

Analysts are looking for a loss of 9 cents a share in fiscal 2001.