3Com rakes in record profits

3Com Corp. on Tuesday reported record revenues in its first quarter, raking in sales of $1.6 billion and returning a profit of $172 million, or 48 cents per share.

Setting an all-time revenue record during the traditionally slower summer months while integrating its merger with U.S. Robotics bodes well for the networking firm as it heads into the winter quarter.

"It's a decent quarter considering the seasonal nature of the first quarter," said Martin Pyykkonen, an analyst at Furman Selz LLC. "That's close to 5 percent sequential growth for what is usually their toughest quarter."

Including the pre-tax, merger-related charge of $426 million from the U.S. Robotics merger, the net loss for the quarter was $147 million, or 43 cents per share.

"The merger of 3Com and U.S. Robotics is off to a tremendous start," said CEO Eric Benhamou, in a prepared release. "Our customers are beginning to see the benefits of our expanded product line, new products, broader distribution capabilities and operating efficiencies."

Excluding the merger charge, 3Com's first-quarter earnings of 48 cents per share matched First Call consensus estimates.

Sales of switches, hubs and remote access products totaled $714 million, up 34 percent from the same period last year. Client access products including network interface cards and modems increased 23 percent to $886 million.

Shares of 3Com stock soared up $1.63 per share to $52 Tuesday after climbing 5 percent in Monday trading.

Most analysts have set 12-month target prices of between $65 to $70 per share.

"I think the tone management sets for the upcoming period will be more important to this stock than today's numbers," Pyykkonen said. "If they can pick up the momentum from this quarter and carry it over to the second quarter, the stock could really move."