3Com CEO Sees Silver Lining Despite Struggles - InformationWeek

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3Com CEO Sees Silver Lining Despite Struggles

The latest financial filing shows the firm's gross margins were the highest recorded by 3Com in recent years.

Despite its financial troubles and pending acquisition, 3Com president and CEO Edgar Masri was upbeat Wednesday as his company reported some financial and acquisition progress in its fiscal second quarter.

While the company's net loss in the quarter widened to $35.6 million from $3.5 million in the year-earlier period, Masri said the firm's gross margins were the highest recorded by 3Com in recent years. Sales of $317.8 million in the quarter represented a decline of slightly more than 4.5% from $333 million.

"We made progress in several areas of the business in the second quarter," said Masri in a statement. "While our overall revenue was lower than we anticipated, our gross margins were the highest they've been in recent history; we once again generated cash from operations; and we recorded our fifth consecutive quarter of non-GAAP operating profit. I also am very pleased with the progress of our Europe, Middle East and Africa region, which continued its rebound with strong top- and bottom-line improvements."

After recording several consecutive quarterly losses, 3Com is in the process of being purchased by Bain Capital LLC and Huawei Technologies in a complex deal that has caused some U.S. national security interests to question the acquisition. 3Com, however, has taken steps to allay the concerns and the acquisition has been proceeding on schedule. The company said it expects the acquisition to be consummated within the next three months.

Bain is expected to retain 83.5 % of the company and Huawei Technologies will own 16.5 % for which it will pay about $363 million.

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