3Com forms CommWorks

In the wake of dismal quarterly returns from its carrier networking segment, 3Com Corp. announced plans Thursday to create a subsidiary, CommWorks Corp., to handle its service provider and carrier systems businesses, according to a company statement.

The Santa Clara, Calif.-based vendor already has a CommWorks line of networking products. 3Com outlined a CommWorks architecture for telephony over IP (Internet protocol) to global service providers in September of last year and followed that with the first set of its CommWorks offerings in January of this year. The company delivered fax-over-IP, Internet call waiting and Net calling cards. 3Com followed up these initial plans by beefing up its unified messaging efforts and expanding its role in the DSL (digital subscriber line) market.

The new CommWorks subsidiary will continue to concentrate on developing products for IP services, including both hardware and software. In particular, CommWorks will target IP telephony, wireless data access, call control and signaling and gigabit-per-second routing systems, 3Com said. Irfan Ali, former senior vice-president and general manager at 3Com, will take on the role of president in the new unit.

3Com said it expects the restructuring to result in a one-time charge of about US$40 million to $60 million in its fiscal third quarter ending March 2, 2001.

Also on Thursday, 3Com beat analysts’ revised estimates when the company reported a narrower-than-expected second-quarter loss. The vendor lost 15 cents per share just over two weeks after warning analysts of lower than expected performance.

In particular, the company’s carrier networking business suffered during the quarter. Revenue in this segment dropped 43 per cent from the previous quarter.

3Com underwent a significant amount of change during 2000. Both the Palm Inc. handheld device subsidiary and modem manufacturer U.S. Robotics Corp. were spun off by 3Com this year. The company today signaled a similar retooling for its IP networking businesses.

CommWorks’ customers include AT&T Corp., America Online Inc. Verizon Communications Inc. and British Telecommunications PLC.

3Com, in Santa Clara, Calif., can be reached at http://www.3com.com/.

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