3Com to Settle Suit Over U.S. Robotics Purchase

3Com Corp. will pay $259 million to settle a class-action complaint alleging it misled investors about its $8.9-billion purchase of U.S. Robotics Corp. in 1997. The company admitted no liability as part of the all-cash settlement. 3Com had been accused of inflating the value of the company’s stock by failing to disclose that U.S. Robotics had accumulated millions of dollars in excessive inventories, among other things. The settlement is the largest ever reached in California for a shareholder lawsuit, attorneys for the plaintiffs said. The settlement covers investors who bought 3Com stock between May 1997 and November 1997. It’s still subject to final approval by a federal judge. 3Com said that the settlement was reached through mediation, and that the $259-million figure represents a compromise between the company and plaintiffs’ attorneys. The settlement will come out of 3Com’s cash reserves and be reported as a charge in 3Com’s fiscal second quarter ending Nov. 30. Santa Clara, Calif.-based 3Com shares fell 31 cents to close at $17.19 on Nasdaq.