3Com: Is Bad News Actually Good News?
These are strange times at 3Com. Gloom-and-doom press reports focus on the company’s failed plans to go private. And more recently, 3Com has dissolved (i.e., shot) its worldwide channel organization. Business must be pretty darn bad at the networking company, right? Actually, that’s not entirely the case.
When it comes to financial performance, the key to success is to set Wall Street’s expectations — and then beat those expectations. Although 3Com just announced a quarterly loss, the company actually beat investors’ expectations, notes TheStreet.com. Year-over-year quarterly revenues rose 4 percent to $336.4 million, and investors actually bid 3Com’s stock up on the news.
Nice. Now, for the trouble. And there’s lots of it. 3Com still needs to get over the sting of its failed bid to go private. At the same time, the company will face heightened competition from fast-growing open source networking and VoIP companies like Digium. (It took 3Com far too long to embrace Asterisk, in The VAR Guy’s humble opinion.)
Oh, and there’s the small matter of 3Com’s channel program, which appears in disarray now that the company has dissolved its worldwide channel organization.
The upshot? Short-term, 3Com surprised skeptics with decent financial results. But without an effective partner network in place, the company’s momentum could likely grind to a halt.