So now Huawei and Bain Capital have bailed out 3Com and given it a $2 billion new lease of life, what are its chances of competing with its old arch enemy, Cisco?
Analysts say an injection of funds won't do much to scrub the memory of customers who were dropped when 3Com pulled out of the enterprise market 7 years ago.
"I think that there’s something of a distrust of 3Com because of it, and it’s difficult to get around. They’ve never really recovered from that. What’s really unclear to me is what Bain and Huawei can really do to restore enterprise confidence in 3Com,” Steve Schuchart, principal analyst for Enterprise Network Systems at Current Analysis is quoted as saying in Jim Duffy's story for Network World.
Georges Yared, writing in BloggingStocks makes some comparisons between Cisco and 3Com:
In July 1994, BOTH companies had a market capitalization of $9 billion. 3Com went on to make some stupid acquisitions like US Robotics, paying top dollar for a company in serious decline with evaporating margins. 3Com has never been the same since. Eric Benamou went on to pursue "other interests" and 3Com has languished at the bottom of the tech food chain. Cisco went on to make over 120 acquisitions, most very strategic and successfully integrated. Cisco at its peak topped $450 billion in market capitalization. That number was frothy and unrealistic in 2000-2001. Today, Cisco's market value is a more earthly $202 billion, nearly 100 times the value of what Bain Capital is paying for 3Com. Cisco is the clear winner in the networking world: game, set and match. In real estate the expression is location, location, location. In evaluating stocks, the expression is management, management, management...
Despite this 3Com did manage to survive through it all - somehow. Shouldn't we give it a second, OK third, chance? Hey, Cisco needs more competitors snapping at its heels.
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