* 3Com: Now what?
3Com late last year bought out its joint venture with Huawei Technologies, an important move for the company as it continues down the comeback trail.
3Com already owned 51% of the joint venture, but is spending $882 million for full control. As part of the deal, Huawei is not allowed to compete in 3Com’s market for 18 months.
The news wasn’t too surprising for those who have been following 3Com. I noted over the summer that 3Com was already saying publicly that it wanted a greater stake in the venture. At the time, 3Com President and CEO Scott Murray resigned (after just seven months) over the time commitment needed to oversee the joint venture, and certainly owning the venture outright is going to be quite a time commitment indeed.
Edgar Masri took over as president and CEO, and he led 3Com during the negotiations in November.
3Com certainly has had a rough few years. The company abruptly withdrew from the high-end LAN switches in 2000, and in 2003 tried to climb back in via this joint venture with Huawei. Meanwhile, Huawei was hoping to get a better foothold in the North American market.
Soon after the buyout was announced, 3Com said it enhanced its enterprise switches (which come out of that venture) so that they are optimized for VoIP. The company also announced a quarterly loss of a penny a share on revenue of $333 million, revenue that was 81% higher than the same quarter the previous year.
So the big question is: Now what? 3Com has the no-longer-joint venture all to itself. Does the company have what it takes to make the most out of that? Is it enough to build a future on?
