3Com Names New CEO in Focus on China

3Com (NASDAQ: COMS) on Tuesday named a new CEO who will be based in China, after it failed to win U.S. government approval to sell a minority stake to China’s biggest telecom gear maker, Huawei Technologies.

The U.S. telecom equipment firm earns much of its revenue from China, and the new chief executive, Robert Mao, said its China-based unit, H3C, could grow in importance over time.

“I believe 3Com can leverage H3C as the cornerstone of its future,” he said in a statement. Mao, 64, is replacing Edgar Masri, who is leaving the company.

The new CEO is a fluent Mandarin Chinese speaker who was executive vice president of corporate development. He will retain his seat on the board, on which he has served for about a year.

H3C generated about 63 percent of 3Com’s $336 million in revenue in the most recent quarter. About 80 percent of H3C’s revenue comes from China, mostly through a resale agreement with Huawei, formerly a joint owner of H3C with 3Com.

Marlborough, Mass.-based 3Com said it has no plans to move its headquarters to China, where about two-thirds of its roughly 6,000 employees are based.

3Com also said it hired Ronald Sege as president and chief operating officer, effective April 30. Sege will be based in the United States and focus on 3Com’s non-China business, including H3C’s global business.

In March, Bain Capital Partners said it was walking away from its plan to buy 3Com for $2.2 billion in a deal with Huawei, which would have had a minority non-controlling stake in 3Com.

The companies failed to win approval from a U.S. government security panel amid concerns among lawmakers over the participation of Huawei, a privately held company set up in 1988 by a former Chinese army officer.

New COO Sege is also expected to focus on TippingPoint, 3Com’s U.S.-based security technology business as it “continues on its path to greater autonomy.” Before the Bain agreement was announced in September, 3Com had said it would look to make TippingPoint into a separate publicly traded company.

3Com said it is still pursuing a $66 million break-up fee it believes it is entitled to because of Bain’s withdrawal from the merger plan. It said Bain has yet to pay the fee for the merger agreement, which it said expired on Monday.

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