May 7, 1997 6:00 PM PDT

3Com chief stumps for merger

Related Stories

U.S. Robotics posts gains

April 23, 1997

Short Take: Digital upgrades notebooks

March 19, 1997

Market thinks USR was no bargain

February 27, 1997

LCD market could get saturated

February 27, 1997

3Com acquires U.S. Robotics

February 26, 1997
LAS VEGAS, Nevada--3Com (COMS) chairman Eric Benhamou is taking his show on the road to sell 3Com's $6.6 billion merger with U.S. Robotics (USRX).

Benhamou hits Boston tomorrow and New York on Friday to persuade investors and Wall Street analysts that his vision of "pervasive networking" will carry the merged 3Com toward future profits in the cutthroat networking business.

"We believe this combination will increase shareholder value," Benhamou told separate briefings today of computer press and financial analysts. "We are creating a formidable networking powerhouse with real depth of channels."

"Historically, our focus has been in the enterprise market, but we see the networking industry as much larger, with more and more connectivity through carriers." U.S. Robotics will add strength both in modems for homes and small businesses, as well as for ISPs and other carriers that use the company's devices at their central facilities, he added.

He described 3Com's principal emphasis as being in software, specifically the company's TranscendWare family for managing the various components of networking infrastructures. The goal is to hide the complexity of networks from users.

"Do you want the connection as fast as possible? Low latency? High bandwidth? Secure end-to-end? All of these choices have to be made," he said, and 3Com is positioned to make policy-based access manageable for corporate networking managers.

Asked in the press briefing about 3Com's position against major rivals Cisco Systems and Intel, Benhamou said 3Com does not compete with either company in all segments.

He described Cisco as focused in the core of networks, while 3Com is targeted more on the peripheries where networks connect to end users. Cisco, he added, is not active with either products or distribution channels in the emerging consumer and small-business markets. With about $6 billion in revenue, Cisco is similar in size to the combined 3Com-U.S. Robotics.

"We view Intel as primarily a microprocessor company focused on lowering the cost of PC ownership," Benhamou said. "3Com is a networking company. We focus on lowering the cost of networking."

Benhamou declined to elaborate on 3Com's "wish list" of future acquisitions but said such ventures would be focused on technology and not as large as U.S. Robotics.

He said the merger's chances of success are greater because the combination does not require merging each partner's direct sales force; they are largely focused on separate segments. The combination will open new opportunities for cross-selling and should save on research and development costs, he added.

Benhamou said he's optimistic that the networking industry can continue to grow at 30 to 50 percent annually over the next three years, though he said the enterprise market may slow somewhat.

Asked about Wall Street's reception of the merger, Benhamou noted that networking stocks have seen their prices gyrate dramatically since the all-stock deal was announced.

"It's never good to announce a large combination in an atmosphere like this, but we viewed this deal as so strategic that we couldn't wait for that wave to subside," he said. With regulatory filings complete and 3Com shareholders set to vote on the merger in June, Benhamou said 3Com will take its case more directly to investors in coming weeks.

He also stated that 3Com's stock had climbed 40 to 45 percent in the last two weeks.

 

Join the conversation

Add your comment

The posting of advertisements, profanity, or personal attacks is prohibited. Click here to review our Terms of Use.

What's Hot

Discussions

Shared

RSS Feeds

Add headlines from CNET News to your homepage or feedreader.