3Com warns on quarterly losses

3Com, the networking equipment group, warned that its quarterly loss would be about double Wall Street's expectations, reflecting the stiff competition in the market from rivals including Cisco Systems and Dell.

The profit warning, which comes as 3Com struggles to hold on to its market share in both the high performance and commodity sections of the market, sent the Massachusetts-based company's shares tumbling.

The stock closed almost 8 per cent lower at $4.21 on Monday.

3Com said it expects a net loss for its fiscal second quarter, which ended on November 26, of between 12 and 14 cents per share.

Wall Street had been expecting a net loss of about 7 cents a share according to Reuters Estimates.

In the year-ago quarter the company reported a net loss of 37 cents per share.

The company said that it expects revenue to be between $149m and $153m, down from a forecast that it provided in April of between $170m and $180m.

Gross margins are expected to be about 35 per cent, down from a previous forecast of about 38 per cent.

?In total, sales and marketing, research and development, and general and administrative expenses are expected to be in line with prior guidance of the mid-$90m range,? the company said in its trading statement.

3Com added that restructuring charges in the latest quarter would be substantially lower than in the second quarter of fiscal year 2004.

3Com has been battling with competition from Cisco at the top end of the market for high performance networking equipment sold to telecommunications network operators and others. It has also faced competition from Dell and other low-price competitors in the market for more basic networking equipment.

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