3Com To Fuse Business Units

3Com Corp. said Thursday that it will consolidate two of its business units to cut costs and move forward.

The Santa Clara, Calif.-based company, which has to fight for market share from rival Cisco Systems , said it will merge its Business Connectivity Company (BCC) into its Business Networks Company (BNC).

“One year ago, the realities of the marketplace and our business required that we create businesses with largely separate functionality in order to enable laser-like focus in specific business areas,” said 3Com president and CEO Bruce Claflin. “That strategy has paid off by allowing each business to force out unnecessary costs, identify key development opportunities in markets in which 3Com can excel, and build appropriate business plans to reach their respective goals.”

The changes will take effect July 1, 2002, one month into its new fiscal year. 3Com is scheduled to release its results of operations for the fourth quarter of fiscal year 2002 and hold its quarterly conference call on June 25.

“In the case of BCC, which has largely marketed NICs and PC cards, this has meant managing a declining market segment as basic 10/100 connection capability moves into silicon, directly onto the motherboard,” said Claflin. “BCC’s primary mission a year ago was to manage the decline of this market by improving costs and expenses at a rate commensurate with the decline. The focus was successful as our traditional NIC business, while substantially lower in terms of revenue, is profitable and generates cash. As NIC/PC card revenue continues to decline, however, it is no longer cost effective to maintain a largely separate infrastructure.”

On July 1, 3Com said BNC will have three divisions: the Connectivity Division, which will include NIC and PC card products; the Personal Systems Division, which will be responsible for technologies that link users to networks with such products as the recently announced Network Jack; and the LAN Infrastructure Division, which includes enterprise switching, voice solutions, wireless, security and small business systems.

3Com said BCC sales will also mesh into the BNC global sales structure and Global Account Managers who cover 3Com’s largest distributors and OEMs will be responsible for BNC and BCC products.

End-user demand creation representatives will be maintained for BCC products and will supplement similar sales positions that exist in BNC.

The company said John McClelland will continue as president of BNC. James Ticknor, currently vice president of BCC Supply Chain Operations, will head the Connectivity Division of BNC. Tom Gerstenberger, currently vice president of BCC Business Operations, will head the new Personal Systems Division of BNC. BNC’s LAN Infrastructure Division will continue to be headed by Patrick Guay, vice president and general manager.

Dennis Connors will continue as President of BCC until the transition in July, after which the company said he will remain as a key member of 3Com’s senior management team.

Other than management shifts, the company did not mention any employee layoffs.

3Com said more details of the plan would be announced before the July 1 cutoff date.

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