3Com slashes 10% of workforce

SANTA CLARA - 3Com became the latest networking firm to announce layoffs when it Monday said that it will cut 1,200 jobs in the company.

The cuts will include 900 full-time and 300 contract and temporary employees, 3Com said, with a total reduction of around 10% of its workforce. Downturns in the telecom market and overall poor economic conditions were cited as the reason behind the job cuts, the company said.

3Com's decision to cut jobs comes as part of a broader restructuring and cost-reducing initiative, which was outlined by CEO Bruce Claflin in December during 3Com's second-quarter earnings announcement. Claflin said that changes would be made "to the structure and operation of our company that will allow us to achieve profitable growth." 3Com started towards this goal soon after when it spun off its carrier network business as CommWorks, a separate, but wholly-owned subsidiary of 3Com.

Monday's announcement comes after rumors surfaced last month that 3Com was considering cutting as much as 20% of its workforce in order to reduce costs. The company has said that its goal is to save $200 million per year as a result of its cost cutting measures. The company said that other areas of cost savings will come from reducing its product costs and its overall plant/property and equipment. 3Com says it will absorb $40 million to $60 million in charges this quarter as it reorganizes the company.

The restructuring that 3Com is going through now is the second corporate shake-up the company has made in the last 12 months. In March of last year, 3Com shocked many customers and industry observers when it announced that it was exiting the large enterprise LAN and WAN switching markets.

"3Com made enough substantial changes during its first restructuring that I wouldn't have thought they'd need to do a second one," says Pat Paczkowski, an analyst with Current Analysis.

3Com spent much of 2000 trying to reshape its brand image and gear itself for small and midsize enterprise markets and service provider markets. Paczkowski says that this second round of cooperate retooling may cause more confusion about what markets 3Com aims to server.

Other telecom companies announcing job cuts in the last six weeks include Nortel Networks and Lucent Technologies, which said they would cut 4,000 and 10,000 jobs respectively. Affected 3Com employees will be given a 60-day notification period, severance pay and outplacement services, the company said.

3Com:
www.3com.com

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