3Com Corporation, a leading global data networking company, today reported financial results for its third fiscal quarter, ended March 1, 1998. Sales for the quarter of $1.25 billion increased 4 percent from the previous quarter. Net income of $13.9 million, or $.04 per share, included a net reduction of approximately $9.9 million to merger related charges associated with the company`s acquisition of U.S. Robotics in June 1997. Excluding this adjustment, net income was $7.4 million, or $0.02 per share. Further, the company also completed its transition to a new channel inventory model, determined late in the second fiscal quarter, that is expected to help increase both the predictability and linearity of sales in addition to simplifying the administration of inventory in global channels. Weeks supply of channel inventories for the company`s network interface cards, modems and systems products all are now within the intended range, as illustrated below: "Converging on our revised channel inventory model and reducing expenses were our primary objectives this quarter," said Eric Benhamou, 3Com chairman and chief executive officer. "I am pleased we were able to meet both of these goals and still post a modest sequential increase in both sales and earnings. It is now time to focus our operational and marketing expertise on each of our four target markets - large enterprise, small and medium enterprise, carriers and network service providers, and consumers - to leverage our global presence, increasing product depth and strong new product cycle." For the quarter, systems products which include switches, hubs, remote access concentrators, and internetworking platforms, totaled $549.9 million, or 44 percent of total sales. Client access products, which include network interface cards and modems, were $700.3 million, or 56 percent of total sales. During the quarter, the company announced a series of significant new products and alliances that are expected to accelerate the widespread deployment of voice, video and data applications on converged network infrastructures for customers in all market segments. This news release, other than historical financial information, may consist of forward-looking statements that involve risks and uncertainties, including, but not limited to, quarterly fluctuations in results, the timely availability of new products, the impact of competitive products and pricing, and the other risks detailed in the company`s SEC reports, including 3Com`s Form 10-K for the year ended May 31, 1997 and Form 10-Q/As for the quarters ended August 31 and November 30, 1997; U.S. Robotics` Form 10-Q for the quarter ended March 30, 1997; and the Joint Proxy Statement/Prospectus dated May 8, 1997. Actual results may vary materially.
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