MARLBOROUGH, Mass.--(BUSINESS WIRE)--3Com Corporation (NASDAQ: COMS) today reported financial results for its fiscal 2008 fourth quarter, which ended May 30, 2008. Revenue in the quarter was $321.3 million compared to revenue of $310.9 million in the corresponding period in fiscal 2007, a 3 percent increase. For the full year, revenue was $1.29 billion compared to full-year fiscal 2007 revenue of $1.27 billion, an increase of 2 percent.

“In FY08 we made progress in several key areas, including growing revenue year-over-year in almost every region, increasing our gross margins and generating cash from operations,” said 3Com CEO Bob Mao. “To build on these improvements, we must increasingly operate as one global enterprise. Integration of our worldwide operations will support our goals of profitable revenue growth and increasing market share, as well as result in cost savings.”

Net loss in the quarter was $166.7 million, or $0.41 per share, compared with a net loss of $66.2 million, or $0.17 per share, in the fourth quarter of fiscal year 2007. In the fourth quarter of fiscal 2008, 3Com recorded a non-cash goodwill impairment charge of $158.0 million, or $0.39 per share, arising from the company’s 2005 acquisition of TippingPoint. 3Com’s recent stock price decline triggered an impairment evaluation required by applicable accounting regulations. The net loss in the quarter increased primarily due to the impairment charge, offset by the absence of certain one-time charges in the prior-year period. On a non-GAAP basis, net income was $35.6 million, or $0.09 per diluted share, compared with net income of $4.6 million, or $0.01 per diluted share, for the fourth quarter of fiscal year 2007.

For fiscal year 2008 3Com incurred a net loss of $228.8 million, compared with a net loss in fiscal year 2007 of $88.6 million. The increase in the net loss is primarily explained by the inclusion of the impairment charge, offset by the absence of certain one-time charges in the prior-year period. On a non-GAAP basis 3Com generated net income for the full year of $94.9 million, or $0.23 per diluted share, compared to net income of $18.5 million, or $.05 per diluted share, in fiscal 2007.

In the fourth quarter, 3Com generated $63.3 million in cash from operations. 3Com’s cash and cash equivalents balance at May 30, 2008 was $503.6 million.

Management will host a conference call and Webcast at 5 p.m. EDT, Tuesday, June 24, 2008, to discuss the company’s financial results. To participate on the call, U.S. and international parties may dial 719-325-4788. Alternatively, interested parties may listen to the live broadcast of the call over the Internet at 3Com’s Investor Relations Web site (www.3com.com/investor) in the Earnings Webcast section.

For those unable to participate on the live call, a 24-hour replay will be available starting at 8:00 p.m. EDT on June 25, 2008 by dialing (719) 457-0820 or (888) 203-1112, Confirmation Code: 1308284. A replay also will be available over the Internet at 3Com’s Investor Relations Web site (www.3com.com/investor) in the Earnings Webcast section. The replay will be available for approximately three weeks after posting.

For additional financial information, please refer to the Investor Relations section of our Web site.

Safe Harbor

This news release contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including forward-looking statements regarding our business objectives and goals, potential cost savings and integration. These statements are neither promises nor guarantees, but involve risks and uncertainties that could cause actual results to differ materially from those set forth in the forward-looking statements, including, without limitation, risks relating to: our ability to grow profitably, expand outside of China, maintain and expand in China, improve expense controls while making investments to grow and other risks detailed in the Company’s filings with the SEC, including those discussed in the Company’s quarterly report filed with the SEC on Form 10-Q for the quarter ended February 28, 2008.

3Com Corporation does not intend, and disclaims any obligation, to update any forward-looking information contained in this release or with respect to the announcements described herein.

The non-GAAP measures used by the Company exclude restructuring, amortization, in-process research and development, stock-based compensation expense and, if applicable in the relevant period, unusual items, such as those detailed in the tables attached to this press release. The required reconciliations and other disclosures for all non-GAAP measures used by the Company are set forth later in this press release, in the Current Report on Form 8-K furnished to the SEC on the date hereof and/or in the investor relations section of our Web site, www.3com.com.

References to the financial information included in this news release reflect rounded numbers and should be considered approximate values.

About 3Com Corporation

3Com Corporation (NASDAQ: COMS) is a leading provider of secure, converged voice and data networking solutions for enterprises of all sizes. 3Com offers a broad line of innovative products backed by world class sales, service and support, which excel at delivering business value for its customers. 3Com also includes H3C Technologies Co., Limited (H3C), a China-based provider of network infrastructure products. H3C brings high-performance, cost-effective product development and a strong footprint in one of the world’s most dynamic markets. Through its TippingPoint division, 3Com is a leading provider of network-based intrusion prevention systems that deliver in-depth application protection, infrastructure protection, and performance protection. For further information, please visit www.3com.com, or the press site www.3com.com/pressbox.

Copyright © 2008 3Com Corporation. 3Com, the 3Com logo and TippingPoint are registered trademarks and H3C is a trademark of 3Com Corporation or its wholly owned subsidiaries. All other company and product names may be trademarks of their respective holders.

3Com Corporation
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
TABLE A
				Three Months Ended								Twelve Months Ended
				May 30,				June 1,				May 30,				June 1,
				2008				2007				2008				2007
Sales				$	321,254			$	310,920			$	1,294,879			$	1,267,481
Cost of sales					147,529				172,483				640,424				689,027
Gross profit					173,725				138,437				654,455				578,454
Operating expenses:
	Sales and marketing				78,402				89,048				316,019				319,696
	Research and development				51,614				71,268				206,653				215,632
	General and administrative				50,310				28,791				129,116				93,875
	Amortization of intangibles				25,626				7,897				103,670				42,525
	Goodwill impairment				157,977				-				157,977				-
	In-process research and development				-				34,053				-				35,753
	Restructuring charges				193				718				4,501				3,494
		Total operating expenses			364,122				231,775				917,936				710,975
Operating loss					(190,397	)			(93,338	)			(263,481	)			(132,521	)
Gain on investments, net					109				344				460				1,143
Interest (expense) income, net					(2,675	)			7,598				(13,087	)			40,863
Other income, net					11,370				11,780				44,364				38,291
Loss from operations before income taxes and minority interest of consolidated joint venture					(181,593	)			(73,616	)			(231,744	)			(52,224	)
Income tax benefit (provision)					14,870				(5,126	)			2,903				(10,173	)
Minority interest of Huawei in the income of consolidated joint venture (1)					-				12,516				-				(26,192	)
Net loss				$	(166,723	)		$	(66,226	)			(228,841	)			(88,589	)
Basic and diluted loss per share				$	(0.41	)		$	(0.17	)		$	(0.57	)		$	(0.22	)
Shares used in computing basic and diluted per share amounts					401,922				395,988				399,524				393,894

⁽¹⁾ Represents Huawei's 49% interest in the H3C joint venture for the period of minority interest that ended with 3Com's acquisition of the remaining 49% interest on March 29, 2007.

3Com Corporation
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
TABLE B
				May 30,			June 1,
				2008			2007
ASSETS
Current assets:
	Cash and equivalents			$	503,644		$	559,217
	Notes receivable				65,116			77,368
	Accounts receivable, net				116,281			102,952
	Inventories, net				90,831			107,988
	Other current assets				34,033			50,157
		Total current assets			809,905			897,682
Property & equipment, net					54,314			76,460
Goodwill					609,297			766,444
Intangibles, net					278,385			371,289
Deposits and other assets					23,229			39,217
		Total assets		$	1,775,130		$	2,151,092
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
	Accounts payable			$	90,280		$	110,430
	Current portion of long-term debt				48,000			94,000
	Accrued liabilities and other				384,429			435,638
		Total current liabilities			522,709			640,068
Deferred taxes and long-term obligations					4,119			23,725
Long-term debt					253,000			336,000
Stockholders' equity					995,302			1,151,299
		Total liabilities and stockholders' equity		$	1,775,130		$	2,151,092

3Com Corporation
Reconciliation of Non-GAAP Measures
(in thousands, except margin and per-share data)
(unaudited)
TABLE C
		Three Months Ended								Twelve Months Ended
		May 30,				June 1,				May 30,				June 1,
		2008				2007				2008				2007
GAAP operating loss		$	(190,397	)		$	(93,338	)		$	(263,481	)		$	(132,521	)
Restructuring			193				718				4,501				3,494
Amortization of intangible assets			25,626				7,897				103,670				42,525
In-process research and development [a]			-				34,053				-				35,753
Impacts to cost of sales from purchase accounting adjustments to inventory [b]			-				63				11,176				63
Patent litigation success fee [c]			9,000				-				9,000				-
VAT recovery dispute [d]			6,069				-				6,069				-
IPO fees write-off [e]			4,864				-				4,864				-
Goodwill impairment [f]			157,977				-				157,977				-
EARP change in control expense [g]			-				57,308				-				57,308
Stock-based compensation expense [h]			9,793				4,962				25,206				20,095
Acquiree expensed acquisition costs [i]			43				-				10,631				-
Non-GAAP operating income		$	23,168			$	11,663			$	69,613			$	26,717
GAAP net loss		$	(166,723	)		$	(66,226	)		$	(228,841	)		$	(88,589	)
Restructuring			193				718				4,501				3,494
Amortization of intangible assets			25,626				7,897				103,670				42,525
In-process research and development [a]			-				34,053				-				35,753
Impacts to cost of sales from purchase accounting adjustments to inventory [b]			-				63				11,176				63
Huawei's 49% minority interest in H3C's amortization as shown above
			-				(30,256	)			-				(41,913	)
Patent litigation success fee [c]			9,000				-				9,000				-
VAT recovery dispute [d]			6,069				-				6,069				-
IPO fees write-off [e]			4,864				-				4,864				-
Goodwill impairment [f]			157,977				-				157,977				-
EARP change in control expense [g]			-				57,308				-				57,308
Stock-based compensation expense [h]			9,793				4,962				25,206				20,095
Acquiree expensed acquisition costs [i]			43				-				10,631				-
Gain on sales of assets [j]			-				-				(6,155	)			(1,300	)
Gain on sale of investment portfolio [k]			-				-				-				(2,000	)
(Gain) loss on insurance settlement [l]			-				(3,908	)			2,066				(6,908	)
Tax reserve release [m]			(11,284	)			-				(11,284	)			-
Charge related to change in tax rates [n]			-				-				6,056				-
Non-GAAP net income		$	35,558			$	4,611			$	94,936