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3Com Corp. (COMS) Shares are Beaten Down, but Business is Strong

3Com Corp. is a leading global provider of secure, converged voice and data networking solutions for enterprises of all sizes. The company competes directly against the likes of Nortel, Alcatel-Lucent, and Ericsson.

3Com’s shares have been on a downward trajectory since the spring, when the US government blocked the sale of the company to Bain Capital and Chinese networking company, Huawei Technology. The shares are selling for approximately $2.50 per share.

3Com’s business is doing well, with $1.33 per share of cash on the books. The bulk of their revenues are now derived from big sales contracts in China. The company has a market-leading presence in China through their subsidiary, H3C. Most of 3Com’s employees are actually based in China.

The company’s move into China and Asia has paid off for 3Com. The most recent earnings report showed that 3Com had earnings of 20 cents per share compared with a loss of 5 cents per share last year. Revenues also rose 7.3% from last year to $342.7 million. The company is estimating that it will achieve a growth in earnings of 25% over the next year.

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