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Monday, 4 December, 2000, 22:23 GMT
3Com warns on profits
Palm's website
3Com spun off Palm earlier this year
Computer firm 3Com has warned that its sales and earnings will be weaker than expected in the second quarter.

3Com had been expected to post a loss of between seven and nine cents per share, but it now expects this figure to be closer to 19 cents.

It is the latest technology company to issue a profit warning and it blamed the weakness of the telecoms sector for its poor performance.

In recent months, Intel and Apple have issued profit warnings, sending shockwaves through the technology-heavy Nasdaq index and renewing fears about the future profitability of the sector.

"The widely published developments in the telecom sector contributed significantly to 3Com's lower-than-expected sales for the quarter," the 3Com statement said.

While large telecom companies have restructured, small and medium-sized companies have consolidated, leading many companies to "defer capital spending", 3Com said.

"However, we believe this sector has substantial long term growth opportunities and we are investing accordingly," chief operating officer Bruce Claflin said.

Sales drop

3Com now expects that its sales will be between $785m and $800m, below the $870m to $910m range it had previously forecast.

3Com, which has struggled in the past against Cisco Systems and other rivals, announced earlier this year that it was withdrawing from the analogue modem business.

It has also spun off its Palm handheld computer unit and the company is now focusing on home-networking, high-speed modems and wireless and internet telephony, and networking for small-and medium businesses.

The announcement came after the market closed and 3Com shares had closed nearly $0.50 higher at $13.37.

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See also:

03 Mar 00 | Business
Palm off to $53bn debut
14 Oct 99 | The Company File
Psion and Palm establish links
29 Sep 00 | Business
Apple slump rattles tech sector
22 Sep 00 | Business
Intel shocks high-tech industry
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