3Com Will Slash 30% of Work Force to Cut Costs

3Com Corp. will cut 3,000 jobs, or 30% of its work force, and may make other spending reductions as the maker of computer-networking equipment tries to become profitable within the next year.

3Com will trim its staff to 7,000 over several quarters, with about 25% of the cuts involving contract workers, spokesman Brian Johnson said. The moves are in addition to 1,200 firings 3Com announced in February and 170 in March. The company said it may trim product-design and equipment expenses.

The Santa Clara, Calif.-based company is trying to save $1 billion annually after slower U.S. economic growth and decreased spending by phone companies led to four straight quarterly losses. 3Com said it plans to become profitable again in fiscal year 2002, which starts in June. 3Com shares have fallen 23% since the first job cuts were unveiled Feb. 26.

The announcement “shows the determination 3Com has in righting the ship and getting costs in line with the current environment,” said Peter Conrad, a senior analyst at Kopp Investment Advisors, which owns about 1 million 3Com shares. “When things turn up, these guys are in a position to show some nice profits.”

Shares of 3Com fell 38 cents on Monday to $6.52 on Nasdaq.

Bigger rivals Lucent Technologies Inc. and Cisco Systems Inc. also have trimmed their work forces as sales have sagged.

3Com Chief Executive Bruce Claflin said in March that the company planned more firings but didn’t say how many or when they would happen.

The company in March posted a fiscal third-quarter loss from operations of $148 million. 3Com’s sales plunged 45%, and the company said revenue wouldn’t rebound for at least three more quarters. Two days later, 3Com said it would shed 170 jobs at a unit that makes high-speed modems.

The company’s last profitable quarter was the period ended Feb. 25, 2000. Since then, 3Com shares have fallen 59% while the Nasdaq composite index has declined 52%.

Amid the losses, 3Com’s assets have dwindled, according to the company’s latest quarterly filing with the U.S. Securities and Exchange Commission.

3Com’s cash and equivalents fell to $785.8 million March 2 from $1.7 billion June 2. Its short-term investments dropped to $1.06 billion from $1.37 billion over the same period.

Chief Financial Officer Michael Rescoe said in March that the company’s cash and short-term investments won’t dip below $1 billion, spokesman Johnson said.

The company will disclose the amount and timing of severance charges when it reports fiscal fourth-quarter results late next month, Johnson said.