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Networking concern 3Com (NASDAQ: COMS), whose colleagues include Cisco Systems, Inc. (NASDAQ: CSCO) and Hewlett-Packard Company (NYSE: HPQ), made an adjusted 10 cents per share in the company's fiscal fourth quarter. Not so great, considering 3Com made an adjusted 9 cents per share one year ago.
In terms of estimates, 3Com did well. The market was expecting 5 cents per share. The analyst community was obviously worried that the recession was going to hamper profit growth more than it did. Of course, who could blame the analysts, right? After all, 3Com did see a better than 8% slide in top-line sales.
Management cut a bunch of operating expenses in Q4, but it did benefit from a line devoted to a patent dispute resolution and patent sale. 3Com generated more cash from operating activities this time around. Although a cash-flow statement was not attached, this archived press release at the company's site said that $63.3 million came from operations in last year's Q4. 3Com derived $84.1 million from operations in the quarter that just passed.
As I write this, shares of 3Com are down well over 8% in afternoon trading on rather robust volume. You would think the market would be a little more kind to an earnings-beating report.
Seems like 3Com wants to correct a bit after the run-up it's seen on the year-to-date frame. Also, this news source indicates that guidance was not to Wall Street's liking.
Today's price action, along with price action in the recent past, tells me that 3Com may not be a buying opportunity. The stock has recovered very well from its 52-week low. But it's still a low-priced equity trading below $5 per share. I wouldn't want to speculate on 3Com at this time.
Disclosure: I don't own any company mentioned; positions can change without notice.
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