3Com posts 55 percent jump in fiscal 2Q profit

AP News
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Posted: Dec 23, 2009 10:47 AM

Computer networking systems maker 3Com Corp. on Wednesday said its fiscal second-quarter profit jumped 55 percent despite falling revenue, as the company trimmed expenses and benefited from a tax adjustment.

For the three months ended Nov. 27, the company earned $20 million, or 5 cents per share, compared with profit of $12.9 million, or 3 cents per share, in the corresponding period a year ago. There were 2 percent more shares outstanding in the recent quarter.

3Com recorded a $10.8 million favorable tax adjustment. That was partly offset by $4.6 million in transaction costs related to the company's pending acquisition by Hewlett-Packard Co. The $2.7 billion deal was announced last month. Excluding these items, adjusted profit in the latest quarter totaled 9 cents per share.

Revenue slid 9 percent to $322.2 million, compared with $354.6 million a year ago.

Analysts polled by Thomson Reuters, on average, expected profit of 7 cents per share, on revenue of $299.7 million.

Operating expenses fell 8 percent from the year-ago quarter. The company repaid $88 million in debt during the period, including $40 million ahead of schedule.

While revenue was down on a year-over-year basis, 3Com noted sales rose 11 percent from the fiscal first quarter. Sales were up in Latin America, the Europe, Middle East and Africa region and China.

3Com rose 3 cents to $7.51 in morning trading.