The company ended fiscal 2006 a year ago this month and reported good news: "In 2006, 3Com's overall business grew for the first time in seven years." Revenue increased 22% to $795 million, growth the company attributed to sales of security products and gains at H3C, 3Com's data-network joint venture with Huawei Technologies in China.
But 3Com still posted a $100 million loss in fiscal 2006, its sixth consecutive year of running in the red. Over the course of that period, the company spent $9.5 billion to sell $7.2 billion worth of goods and services, resulting in a net loss of $2.3 billion.
If you disregard the company's fiscal year and examine the quarters that occurred in calendar '06, the picture looks brighter: Viewed this way, revenue is more than $1 billion for the first time in five years, and the company musters a profit of $364 million.
3Com recently finished the acquisition of the outstanding shares of H3C from Huawei and in 3Com's most recent quarter (third quarter of 2007), the H3C segment accounted for 60% of the company's $323 million in sales.
It is ironic to see the enterprise switch/router business, which 3Com exited in 2000, bring the company back from the brink.
Juniper: Sticking to its knitting
Juniper, founded in 1996, never turned its back on that market and is reaping the rewards. It finished 2006 with revenue of $2.3 billion, an increase of 9%.
Juniper did, however, post a whopping $997 million loss for the year as it wrote off goodwill amassed on its balance sheet from the acquisition of security vendor NetScreen. If that one-time event is overlooked, the company would have finished the year with a profit of $439 million.
AT&T: Meet the new boss
Out on the WAN front, the big news has been industry consolidation. Although Verizon finished 2006 as the leader of the pack with sales of $88 billion and net income of $6.2 billion, AT&T completed the acquisition of BellSouth in the waning days of the year and technically is now top dog.
AT&T's 2006 results -- $63 billion in sales and $7.4 billion in income -- reflect only two days worth of BellSouth consolidation. But when you add it up, AT&T is a $117 billion behemoth churning out $10 billion in profits.
The new AT&T is an amalgamation that started when Southwestern Bell Corp. (later called SBC) merged with Pacific Telesis in 1997, acquired Ameritech in 1998, bought AT&T in 2006 and adopted that name, and swallowed BellSouth.
This last move enabled AT&T to assume the 40% economic interest that BellSouth held in AT&T Mobility (formerly Cingular Wireless), making AT&T the largest single wireless player with 61 million subscribers. Wireless accounts for 37% of revenue, with the business segment accounting for 26%, consumer 23%, wholesale 12% and directory 5%.
The company says it carries 9.6 petabytes of data traffic on an average business day and has more broadband lines in service -- 12 million plus -- than its competitors.
Verizon: Wireless leads the way
Verizon 2006 results also reflect merger activity, with revenue increasing 27% as MCI results are consolidated for the first time.
The company is hot on the heels of AT&T on the wireless front, with 59 million customers delivering $32.8 billion in revenue. At year-end the company realized its first $10 billion quarter in wireless revenue.
The data subset of that wireless revenue doubled for the third consecutive year in 2006, contributing $4.5 billion. The company says its wireless network can reach 200 million people and adds that a third of its retail customer base (19 million) have broadband-capable devices.
By means of comparison, Verizon's wireline data revenue was $16 billion in 2006.
The company also says its fiber-to-the-premise initiative, called FiOS, is on track, with fiber passing more than 6 million homes with a penetration rate of 14%. Of that base, 2.4 million homes can also get FiOS TV, but only 207,000 customers have taken the company up on the offer.
Sprint: Betting on WiMAX
Sprint's 2006 performance reflects acquisition activity as well: a 42% jump in revenue to $41 billion as it folds in Nextel. The company, however, also divested its local communications business, which is known as Embarq, to focus on wireless.
Sprint is the single largest holder of 2.5Ghz spectrum used for WiMAX wireless data services, and says it plans to start launching WiMAX services in large metropolitan areas in 2008.
All told, the 12 companies profiled here generated more than a half a trillion dollars in revenue in 2006, more than the gross domestic product of the Netherlands and $72 billion in profits.
But there is no rest for the weary. The lesson from 2006 is that this is a business requiring constant reevaluation. The spin of the wheel in 2007 could reorder the ranks yet again.