Network equipment maker 3Com announced Wednesday a new CEO who will be based in China.
Robert Mao, 3Com CEO
(Credit: 3Com)Robert Mao, 64, will succeed Edgar Masri as chief executive officer. Mao, who is fluent in Mandarin and English, had most recently been 3Com's executive vice president for corporate development. Prior to working at 3Com, he headed up Nortel Network's China operations. And before that he had worked for the French telecommunications equipment maker Alcatel, which is now Alcatel-Lucent.
3Com also said Wednesday that it has hired Ronald Sege, 51, as chief operating officer. Sege, who will run 3Com's U.S. operations, returns to 3Com after a decade. From 1989 to 1998, Sege held several senior executive positions at 3Com. Most recently he had been CEO of the Wi-Fi equipment maker Tropos from 2004 until this year.
The news of the management shift comes after the U.S. government essentially put the kibosh on a proposed $2.2 billion buyout of 3Com by Bain Capital Partners and Huawei Technologies.
Bain Capital had originally agreed to buy 3Com in September 2007 in a deal that would have given Huawei Technologies, which is based in China, a 16.5 percent stake in the company. As part of the deal, Huawei would have had the opportunity to increase its share by another 5 percent.
The Bush administration had raised security concerns over the deal. 3Com makes network security equipment that is sold to the U.S. Department of Defense. The government has traditionally been leery of allowing foreign ownership of critical communication assets.
Last month, after the Committee on Foreign Investment, an official security panel under the U.S. Treasury Department essentially blocked the deal, Bain Capital Partners withdrew its bid for the company.
3Com, which was founded in 1979 by the Ethernet inventor Robert Metcalfe, helped shape the early Ethernet and IP networking market. The company had many successes over the years, including the spin-off of the handheld device company Palm. But over the last decade, the company has lost much of its luster and market significance as competitors, namely Cisco Systems, have risen in importance.
Despite the company's decline over the years, 3Com has survived. And in recent years, it has recognized China as a key emerging market. In 2003, it formed a joint venture with Huawei to better serve the Chinese market. And in November, 3Com paid $882 million to buy Huawei's 49 percent stake in the venture. Today, about 4,000 of 3Com's 6,000 employees are based in China with only a little over 400 employees working at its U.S. headquarters in Massachusetts.
3Com's decision to put Mao in charge is yet another signal that the company sees China as its most important market.
"In addition to his 30 years in the global IT and telecommunications industry, Bob's bi-cultural background, extensive business experience in Asia and fluency in Mandarin and English offer a rare set of skills that can bridge Chinese and western organizations," Eric Benhamou, chairman of 3Com, said in a statement. "Bob brings the company a set of skills that are uniquely fitted to 3Com's current business needs. Having him based out of China and having an experienced leader of Ron's caliber based in the United States will allow us to speed execution of our global business plan."
Michael Robertson is behind the new site Dealipedia.
(Credit: Michael Robertson)Serial entrepreneur Michael Robertson has started a new business-information site called Dealipedia.
Robertson, founder of such companies as MP3.com and Linspire, is relying on the wisdom of crowds to supply information on IPOs, mergers, acquisitions, closings, bankruptcies, and investments. He said that Wikipedia has proven that allowing the masses to provide and edit information works.
Dealipedia is a "combination (of) news, reference and perhaps a bit of gossip for business deals," Robertson said in an e-mail to CNET News.com.
At Dealipedia.com, I clicked on the site's "Who Made the Money" section to see if Robertson's own name was included. Sure enough, it was. According to the site, Robertson pocketed $115 million when he sold MP3.com to Vivendi Universal for $372 million in May 2001.
Jason Calcanis made $11 million and Mark Cuban made $2 million (as of Tuesday afternoon) when Weblogs was sold to AOL. None of this is breaking news and the section is relatively bare of details. But Robertson is hoping the content will grow as greater numbers of business insiders contribute.
In one area, Robertson will also allow users to post info anonymously. He said this has supplied new details about Flickr, Delicious, and GrandCentral.
"After continually getting frustrated that I couldn't find historic data on business deals," Robertson said, "or easily keep track of new deals without reading a dozen different publications, I decided to remedy the problem."
The site is designed to appeal to investors, venture capitalists, and entrepreneurs, Robertson said. His intent is to offer a "nice snapshot" of a company's life cycle from the first round of investment all the way to an IPO.
Today is the official U.S. launch of Ezmo, a Norwegian Web service that allows users to post and share their entire digital music collections through a simple Flash application. ... Read more
Surely, 3Com could have written its own VoIP software. In fact, it has, releasing two new products recently based on its own technology. But the more interesting release is its OEM'ing of Digium's Asterisk-based VOIP appliance.
"Digium is the leader in open source telephony, so we are partnering with the most significant company in that space," [3Com marketing director Kevin] Flanagan said. "By taking the [Digium] Asterisk Appliance and placing a 3Com UI on it and supporting it with our Global Service organization, which we believe no other open source telephony provider can do, we are making this technology available to even the smallest businesses and organizations."
I view this as a toe dip for 3Com. If successful, undoubtedly it will end up going even farther with Digium/Asterisk. Why reinvent a wheel that the open-source community is already building?
Kudos to 3Com CEO Edgar Masri and the board for selling the company to Bain Capital and Chinese networking provider Huawei. I suppose the company will be taken private from here. We've seen this in the networking business before: Enterasys was taken private in November of 2005 for $385 million.
While the strategy is well-understood, I really have no idea what Bain and Huawei are thinking. You could point to the fact that 3Com did about $1.2 billion in revenue, and has global distribution in place for more product sales. You can even talk about 3Com's market share in SMB networking. Yes, the company has a few strengths, but it has also been bleeding red ink for years and has reinvented itself more times than Cher. Here in Massachusetts, lots of people I know have worked at 3Com at one time or another and generally leave the company, either by force or voluntarily, in a rather unhappy state. It's been a proverbial "house of cards" for at least 10 years.
When companies go private, investors typically cut resources, sell off assets, and fix core operations. Once this is done, they look to go public or sell the now healthy entity to another firm. The problem here is that 3Com has already made more cuts than Edward Scissorhands. At the same time, other networking vendors have greatly improved products and sewn up markets. Cisco is Cisco; Juniper kills it in the service provider market; Hewlett-Packard is winning in the SMB space; Extreme has a killer end-to-end switching architecture, etc. Other than TippingPoint, I can't recall the last time an IT executive even asked me if 3Com was still in business.
Perhaps this new 3Com team will prove me wrong and reinvent itself this time (as opposed to numerous other times) but for now, the only people who are guaranteed to make money on this deal are the investment bankers and lawyers. Oh, and the 3Com management team will also make some dough here as well for dressing up the company and finding a buyer. These few fortunate souls pale in comparison to the generations of investors and employees who long ago lost money and faith in 3Com.
Huawei was already in bed with 3Com, but why Bain went along for this ride is a mystery to me. Perhaps the Bain folks would also be interested in a certain bridge in New York City that I will gladly sell.
Networking company 3Com announced Friday that it will be acquired by private equity company Bain Capital and former joint-venture partner Huawei Technologies in a $2.2 billion cash deal.
The transaction, first reported in the Wall Street Journal, will give China's Huawei a minority stake in the Marlborough, Mass.-based company.
3Com, which has struggled in the shadow of networking giant Cisco, would once again link up Huawei to its former joint venture with 3Com, H3C. In March, 3Com bought out Huawei's remaining stake for $882 million, securing full ownership of H3C.
"3Com has a strong competitive position, and we believe there are significant opportunities to grow by acquiring customers and introducing new products," Jonathan Zhu, a Bain Capital managing director based in Hong Kong, said in a statement.
Meanwhile, a sale to Bain may nix 3Com's earlier plans to spin off TippingPoint, a networking security company it acquired in 2004 for $430 million. 3Com is well-versed in spin-offs, having cut loose its former handheld device unit, Palm, in 2000.
The Bain-3Com deal, valued at $5.30 a share, is expected close in the first quarter.
Should Allofmp3.com reappear, as the controversial online music store has promised, it likely will doom its country's chances of joining the World Trade Organization this year.
"We remain committed to helping Russia make it into the WTO," said Sean Spicer, a spokesman for the U.S. Trade Representative, the group that negotiates International trade agreements on behalf of the nation. "In order to make that happen though, they have to honor the commitments that they've made especially in the area of intellectual property rights."
If that wasn't clear enough, Spicer was more direct here: "I don't see Russia entering the WTO with sites like Allofmp3.com up and running."
Russia has tried to comply. At least they made an attempt two months ago to shut down Allofmp3.com and try the company's owner, Denis Kvasov, for violating copyright and intellectual property laws. The problem for Russian trade officials is that Kvasov apparently operated a law-abiding site. The Cheryomushki Court in Moscow acquitted Kvasov.
A message posted at Allofmp3.com notified customers that the site will return but doesn't say when. For some undisclosed reason, the date of the message is Aug. 31.
The recording industry claims that Allofmp3.com is a renegade retailer. The company distributes digital downloads without the permission of copyright holders. Allofmp3.com has claimed that it sends royalties to a Russia-based artist's group, but the Recording Industry Assoc. of America doesn't recognize it.
For a long time, U.S. trade officials have tried to pressure Russian authorities to close the site but Allofmp3.com continues to defy the music industry and government regulators from both countries.
Meanwhile, Russia's hopes of entering the WTO by the end of the year are evaporating. Think of the WTO as an exclusive club, one that Russia desperately wants to join.
The WTO is made up of 150 countries that have agreed on rules and regulations regarding trade. This makes selling goods or services overseas easier for companies from member countries, Spicer said.
But the RIAA claims that pirates outside of the U.S. are stealing billions of dollars. Before the U.S. will support Russia's WTO membership, it wants the government to clean up piracy and improve its standing with the entertainment industry.
So Allofmp3.com's fight will likely continue. How long the site can last is anybody's guess. One thing is certain, all the notoriety from the shut down, subsequent trial and reappearance is free publicity for Allofmp3.com.
...then is there any differentiation in open source?
This is the question I asked myself when I saw 3Com announce that open source is the wave of its future, and a key differentiator against Cisco.
As a company executive posited,
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