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3Com confident Huawei venture will boost sales

3Com Corp, a maker of computer-networking equipment, said it is counting on a venture with China's Huawei Technologies Co (華為科技) to help it get more corporate sales and reduce research costs.

"We're hoping to get a serious expansion of our enterprise product line," 3Com's managing director of Asia-Pacific Stanimira Koleva, said in a televised interview with Bloomberg News.

Koleva declined to comment on the joint venture's progress.

Huawei-3Com Co was set up last March to help Marlborough, Massachusetts-based 3Com to capitalize on rapid growth at Huawei, China's biggest telecommunications equipment company. 3Com hasn't had a quarterly profit in almost four years.

"The Huawei venture has given 3Com a whole new product portfolio," Wes Cummins, an analyst with B. Riley & Company Inc in Los Angeles, said in a phone interview.

"It really positions them to grow into a serious contender in the market place versus Cisco Systems Inc," he said.

Cummins has a "buy" on the stock but he doesn't own it.

Shares in 3Com have risen 77 percent since it formed Huawei-3Com on March 20 last year. Cisco, the world's largest manufacturer of equipment to link computers, has risen by the same amount. 3Com's stock rose US$0.07, or 0.9 percent, to US$7.69 on Tuesday in New York.

Rising sales in

Asia-Pacific

About 16 percent of 3Com's sales came from the Asia-Pacific region last year. That is likely to rise in the next two to three years, Koleva said.

"We will probably see a slight increase in that share," she said. "There are a number of markets here, which promise to have much higher growth than in European or American regions."

She didn't elaborate.

3Com said on Dec. 18 its fiscal second-quarter loss doubled to US$139 million, or US$0.37 a share, as sales dropped by a third. Sales in the three months ended Nov. 28 fell to US$181.9 million from US$272.2 million.

In contrast, Shenzhen-based Huawei said its profit last year more than doubled as sales surged to a record. The company had net income in excess of US$300 million last year, compared with US$108 million in 2002, company spokesman Richard Lee said on Jan. 14.
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