3Com, Cableton Post Positive Results

Network equipment vendors 3Com Corp. and Cabletron Systemsposted strong quarterly financial results this week.

3Com yesterday [9/21] reported net income of $137.5 million for its first fiscal quarter, up from $93.7 million in the same quarter last year. Revenue remained roughly even, at $1.387 billion in the quarter compared with $1.4 billion a year ago. The company attributes the improved margins in part to streamlined operations, improved supply-chain management, reduced sales and marketing expenses, and a lower head count.

3Com has just over 12,400 employees, nearly 600 fewer than it employed at the beginning of the quarter.

3Com's Palm computing device is taking an increasingly important role in the company's fiscal health. Revenues generated from handheld devices increased 50%, compared with the same period a year ago, to $174.2 million and representing 13% of 3Com's overall revenue.

Later this year 3Com plans to announce systems for enterprise networks that are based on the Palm operating system, says 3Com chairman and CEO Eric Benhamou.

And Cabletron continues to recover its financial heath slowly. On Monday, Cabletron reported $12.5 million in net income for its second fiscal quarter, up from $10.5 million in the same quarter last year. Revenue dipped slightly, with Cabletron posting $356.6 million, down from $370.6 million a year earlier. CEO Piyush Patel attributes the growth to increased sales of the SmartSwitch Router.

Despite the strong posting, Cabletron's stock tumbled more than 10% yesterday [9/21] following news that Compaq Computer will no longer resell Cabletron's networking equipment.