Monday, December 06, 2004

3COM misses again

Is any one keeping track of how many times COMS has missed internal guidance? Well today's pre-announcement was the third consecutive miss, now that's a trend we can rely on! Management lowered its own guidance on both revenues and EPS which tells you not only is sales hard to come by, they might be having issues with pricing as well. Gross margin guidance was lowered to 35% from 38%.

My take is that COMS is having market share loss that can not be turned around by just lower pricing, corporations still care about quality. As DELL has figured out how to make cheap L2-L3 switches that can hold their own. Even having a partnership with Huawei does not help COMS at least not in the U.S., what Siemens can do in Europe with Huawei remains to be see. So this might suggest that the world outside of China (atelast the US) is not ready to accept Huawei or ZTE products just yet and lower pricing is not everything. COMS is struggling against not only CSCO, EXTR and FDRY but also HPQ, NTGR.

This might also hint that "the intensified competition from Asian vendor" comment by Chambers on CSCO call was maybe due to pricing competition at higher level router products instead of L2-L3 switches, which is even more troubling. But the quality remains the differentiator, at least for now.


Blogger Jimmy said...


I just happened onto your blog through a recommendation on the Seeking Alpha blog. Do you an RSS feed set up?

Keep up the good work!

5:22 AM  

Post a Comment

<< Home