3Com’s Restructuring Claims Audrey, Kerbango

3Com Corp. Wednesday accompanied news of its horrific revenues slide with the
announcement that it will stop making its Audrey Web surfing appliance and
Internet radio Kerbango this June.


For now, that means 3Com will focus on streamlining its broadband modem
business despite the fact that it was hit hard; this business, which
provides high-speed connectivity for subscribers of digital subscriber line
(DSL) was hit by shrinking prices and margins as demand waned.


The company said cutting the Audrey and Kerbango product lines would account
for half of its $1 billion cost-savings goal. 3Com had previously announced
a 10-percent reduction in its workforce, or some 1,200 employees, to help
with that.

Although the latest, 3Com is certainly not the first to tread the killing-of-the-product-family path. Netpliance gave up on its i-opener terminal in January. Instead, Netpliance tabbed service provider EarthLink to pick up the 53,000 subscribers for that product this month.

The one glimmer of hope for the Net appliance market came out of Larry Ellison’s New Internet Computer Co., which on Wednesday announced it is shipping the second generation of its popular New Internet Computer. Priced at $199.99, the machine operates on the NIC operating system v2.0 announced last week.

To be sure, some analysts have said people are just not ready to be enticed by such devices when they can use their PCs, lap-tops or handheld computers.


Whatever the case may be, 3Com Chief Executive Officer Bruce Claflin said
Wednesday that the line would take longer to develop than originally
planned; essentially, the outfit would not be able to recuperate what it
spent to make them. Audrey retailed for about $500.

Overall, 3Com posted a net loss of $246 million, or 76 cents a share this
third quarter, which ended March 2.


3Com, whose 52-week high had been $21.17, closed at
$5.97 Wednesday.

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