September 28, 2000 2:55 PM PDT

3Com chief executive steps down

Eric Benhamou has resigned as chief executive of network equipment giant 3Com.

Current president and chief operating officer Bruce Claflin will take over as chief executive Jan. 1, 2001. Benhamou will remain as chairman. 3Com's board of directors approved the executive change at the company's shareholder's meeting today.

A 3Com spokesman said Benhamou decided to leave his post as CEO after 10 years of running the company.

"He made a 10-year commitment, and he fullfilled that commitment. It was his idea to retire," a 3Com spokesman said. "Claflin has been very busy and has played a key role in setting the strategic direction of the company. This is the right time..."

3Com, once a major force in networking, has struggled financially the past two years amid an exploding networking market. With Benhamou at the helm, 3Com has faced stagnant revenue growth, while long-time rivals Cisco Systems, Nortel Networks and emerging networking companies, such as Juniper Networks, Foundry Networks and Extreme Networks, have seen their profits skyrocket.

Prior to joining 3Com in 1998, Claflin was a senior vice president of sales and marketing at Digital and held senior management positions at IBM, including leading IBM's product management efforts for its PC business.

Benhamou, who had been grooming Claflin for the top job the past two years, said now was the perfect time for him to step down.

"Bruce is a very experienced, smart executive and he's up to the challenges" the company faces, Benhamou told CNET News.com. "We've just been through a strategic transformation...and it feels like the company is now on a growth path. Now's the best time to have a transition take place."

Analysts said today's move is a positive one for 3Com. "There's been some baggage associated with Benhamou for some time, because he was presiding over the last several years, and the company has struggled," said Chase Hambrecht & Quist analyst Erik Suppiger.

Argus Research analyst David Toung believes Claflin has already left an imprint on the company as second in command.

"Claflin is an operations-oriented person, and this may bring more focus to the company," Toung said. "The fact that 3Com is exiting low-margin businesses, I think Claflin had a lot to do with that."

After two years of flip-flopping its business strategy, 3Com in March announced a major reorganization intended to turn the company's fortune's around.

On Tuesday, 3Com reported first-quarter sales that beat forecasts and a smaller-than-expected loss. 3Com executives expect the company will be profitable early next year.

Over the past year, 3Com has spun off Palm, shed its slow-growing analog modem business, and killed off its networking equipment arm for large businesses. The company now caters to small and midsized businesses and consumers, two markets the company has historically dominated.

The company also is selling software and equipment to service providers and focusing on emerging markets, such as high-speed modems, wireless and home networking and Internet telephony.

see Q&A: 3Com president predicts company revival As 3Com chairman, Benhamou will run a technology committee on the board of directors as well as run 3Com's public policy as it relates to technology issues, such as the Digital Divide, the division between the wealthier segment of society with access to technology and all its riches, and those left behind.

Toung, the analyst, said the new role fits Benhamou, who has long been outspoken on the Digital Divide issue and how technology firms could bridge the gap between the haves and have-nots.

 

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