3Com to Cut 10% of Full-Time Work Force

3Com Corp., a computer-networking products maker, said Monday that it will cut 1,200 jobs, including about 10% of its full-time work force, because of a weak economy and “turmoil” in the telecommunications industry.

The move is the first step of a reorganization plan announced by Chief Executive Bruce Claflin in December that aims to save $200 million to $250 million annually.

The layoffs consist of 900 employees out of 9,200 on 3Com’s payroll and 300 out of about 2,500 contractors who do work for the company, spokesman Brian Johnson told Bloomberg News. He declined to give a breakdown of the cuts by region or department.

3Com has had three straight quarterly losses as sales to phone companies slowed and it spun off its profitable Palm Inc. electronic-organizer unit. The company expects next month to report its fourth-straight quarterly loss, for its fiscal third quarter that ends Friday.

3Com and other makers of telecommunications equipment have been hurt by a slowdown in capital expenditures by telecommunications carriers.

In its most recent quarter, 3Com’s sales of equipment to telecommunications carriers declined 43% from the year-earlier period to $95.4 million.

Sales at 3Com have fallen year over year for the last seven quarters, and 3Com is expecting revenue to be down 25% in fiscal 2001 from the previous year, when it posted revenue of $4.3 billion.

Shares of Santa Clara, Calif.-based 3Com rose 47 cents Monday to close at $9.50 on Nasdaq. The shares have fallen 36% since December, when the company lowered its earnings outlook and announced plans for a cost-cutting reorganization.

The work force reduction is the second announced by 3Com in a year.

In March, the company said it would cut as much as a fourth of its employees by selling most of its dial-up modem business and ending production of networking equipment for big organizations.