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3Com Corp. (NASDAQ: COMS) shares are up around 12% so far today after the network equipment maker raised its first-quarter sales and profit forecasts due to gains in China. Not only did 3Com raised guidance, it also raised it above analyst estimates.3Com, which makes routers, switches and cables for telephone companies, has more than quadrupled sales in China since buying out Huawei's stake in their joint venture H3C last year. China now accounts for almost half the sales at 3Com.
Some may be concerned due to recent reports of China's slower economic growth. But two things are worth mentioning here. First, China's slower GDP growth is still a whopping 9%, down from 11%. And second, telecom infrastructure will likely continue at the same pace.
It isn't surprising, then, that 3Com has raised guidance for both sales and earnings. Specifically, 3Com expects sales in China to be 10% higher than in the previous quarter on stronger sales to Huawei.
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