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3Com to Shut Its Lone Plant, Cut 1,000 Jobs

September 11, 2003|From Reuters

CHICAGO — 3Com Corp. said Wednesday that it planned to cut about 1,000 jobs, or almost a third of its work force, and close its only remaining manufacturing plant in the face of weak technology spending.

The company, which makes gear used by corporations to direct Internet traffic, said it would close its plant in Dublin, Ireland. 3Com, whose shares fell almost 5%, said it would shift its manufacturing, distribution and related activities to contract manufacturers Flextronics International and Jabil Circuit Inc. over the next six months.

"It really paints a picture of an industry that perhaps may have bottomed out, but is certainly not in any type of meaningful upward trend because of constraints in the capital spending environment," said Blaylock & Partners analyst Gabriel Lowy, who follows the stock but does not have a rating on it.

However, 3Com Chief Financial Officer Mark Slaven said the plans unveiled Wednesday had been in place for a while and investors should not draw conclusions about the current market demand.

3Com's revenue tumbled 41% to $175 million in the three months ended in May. The company, which spun off Milpitas, Calif.-based Palm Inc. in July 2000, employed 3,300 people at the end of May, and said in an August regulatory filing that it intended to reduce its work force by about 10%.

The company, which moved its headquarters to Marlborough, Mass., from Santa Clara, Calif., this summer, declined to say how many of the affected workers were employed in Dublin, the last of several plants 3Com has closed or sold over the last five years.

3Com's stock fell 29 cents to $5.66 on Nasdaq.

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