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3Com Corp. (Nasdaq: COMS) was up 0.19 at 10.56 early Tuesday, following reports that the networking equipment maker is planning job cuts.
The Santa Clara, California-based company is reportedly cutting jobs as part of a plan to cut US$200 million to $225 million in costs per year. Some reports said the number of jobs to be cut will be determined by the end of February, while others said the company will lay off 20 percent of its workforce.
For its latest fiscal quarter, ended December 1st, 3Com reported a loss before extraordinary items of $52.4 million, or 15 cents per share, on revenue of $789.5 million. The company, like others in the telecom equipment business, has been hit by a slump in demand for its products.
3Com said in December it would spin off its carrier network business into a separate subsidiary, CommWorks Corp. The plan will give the new unit "the freedom and resources necessary for success in the carrier marketplace, while leveraging the financial and technical strengths of 3Com Corp.," president and chief operating officer Bruce Claflin said in announcing the plan.
The spinoff and related restructuring will result in a charge of between $40 million and $60 million in the quarter ending March 2nd, 3Com said. The company did not mention job cuts at the time, but said the plan will save between $200 million and $250 million per year.
The company said it expects to post an operating profit by 2002, assuming the
streamlining plan works and revenue grows at a moderate rate.
