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Layoffs, other cost-cutting measures coming to 3Com

The Associated Press
Tuesday January 16, 2001

SAN JOSE — 3Com Corp., a struggling maker of computer network equipment, said Monday it plans to lay off workers as part of a plan to save at least $200 million a year. 

3Com, which has been hurt by a slowdown in spending from telecommunications companies, plans to decide by the end of February how many job cuts will be necessary, spokesman Mike MeCey said. 3Com employs 11,500 people worldwide. 

“We’re not taking this decision lightly,” he said. “The company is in the process of determining where the savings can be achieved.” 

Santa Clara-based 3Com also will trim travel spending and other discretionary costs, find ways to save money on manufacturing and purchasing and might sell off plant equipment and property, MeCey said. 

All that is in addition to 3Com’s plans, announced last month, to create a wholly owned subsidiary that will build networks for enhanced voice and data services over the Internet – what are known as IP services. 

3Com will take a charge of $40 million to $60 million in this quarter to institute the restructuring. The company expects the changes will save $200 million to $225 million per year. 

3Com has not turned a profit since it spun off its division that makes the popular Palm line of handheld computers last year. CEO Bruce Claflin said last month the company hopes to get back into the black in the first quarter of fiscal 2002, which ends this August.  

Wall Street is expecting the same. 

3Com shares lost 31 cents, or nearly 3 percent, to $10.38 on the Nasdaq Stock Market on Friday, the last day of trading before the announcement.