3Com

3Com names China-based CEO, U.S. COO

Wed, 30 Apr 2008 06:59:55 -0400

3Com has named a new CEO who will be based in China and a new COO who will be based in the U.S. This intriguing development comes not long after 3Com withdrew from U.S regulatory consideration an acquisition proposal that would have seen China's Huawei Technologies and private equity firm Bain Capital buy 3Com for $2.2 billion. Robert Mao, who had been a director of 3Com and previously had worked for the company, is the new CEO, and Ron Sege, a longtime telecom veteran who most recently led Tropos Networks, is the new COO.

3Com's potential acquisition fell apart over concerns from the Committee on Foreign Investment in the U.S. that a Huawei, a firm connected to the Chinese government, would own at least 16% of 3Com. Since then, The Wall Street Journal reports, 3Com insiders, including Mao, have been buying up 3Com stock.

For more:
- see this report in the Wall Street Journal

Related articles:
3Com shareholders last month approved the acquisition offer 3Com report
Huawei, Bain in $2.2 bln 3Com LBO 3Com report

SPOTLIGHT: 3Com posts $7.8 million quarterly loss

Tue, 25 Mar 2008 07:59:52 -0400

Amid the wreckage of failed acquisition, 3Com announced a $7.8 million net loss for its fiscal third quarter. However, revenue for the quarter was up about 4 percent to $336 million, and the improved revenue and a positive forecast offered by 3Com for its fiscal fourth quarter drive the company's share price to rise. It remains unclear after Bain Capital and Huawei backed out of a deal to acquire 3Com whether or not the networking vendor will find a new buyer.

For more:
- see this report at MarketWatch

3Com shareholders approve dead deal

Mon, 24 Mar 2008 07:59:56 -0400

3Com shareholders voted to accept a $2.2 billion acquisition offer from Bain Capital and Huawei. Too bad the offer was already off the table. Last week, 3Com said it would press ahead with the vote despite the fact that 3Com, Bain and Huawei had not been able to come up with a revised offer that could pass muster with the Committee for Foreign Investment in the U.S.

Bain reportedly had proposed potential alternatives to 3Com officials, but Bain and Huawei apparently backed out when none of those alternatives satisfied 3Com. Now, 3Com wants a $66 million break-up fee.

For more:
- see this story at The Wall Street Journal
- read this follow-up about the break-up fee at The Boston Business Journal

Related articles:
- After lots of rumors, the 3Com acquisition was first announced last fall

3Com buyout uncertain, but headed for vote

Thu, 20 Mar 2008 07:59:55 -0400

3Com still plans to vote tomorrow on a standing $2.2 billion offer from Bain Capital and Huawei Technologies to acquire the firm, even though 3Com previously withdrew the deal from consideration by the Committee on Foreign Investment in the United States. The company was planning to work with the prospective buyers to revise the deal and re-submit it for federal consideration, but that has not happened yet. Still, 3Com officials continue to recommend the original offer to shareholders and say they are fulfilling their responsibility by pushing the offer to a company vote.

The federal committee is said to be concerned that a portion of 3Com's network security business that has dealings with U.S. military should not be put under partial ownership by a company with ties to the Chinese government. The initial acquisition would give Huawei a 16.5 percent stake in 3Com.

For more:
- check this coverage at The Wall Street Journal

Related article:
- Huawei can raise its stake in 3Com to 21.5% under the deal terms

ALSO NOTED: 3Com looks to save deal; Google revs UC engine; and much more...

Wed, 27 Feb 2008 06:59:51 -0500

> Stop asking 3Com what's next--it still wants to save its deal with Bain Capital and Huawei Technologies. Article

> Google's GrandCentral unified communications project is busting out of beta. Article

3Com pulls buyout from federal review

Thu, 21 Feb 2008 06:59:56 -0500

3Com has withdrawn the $2.2 billion acquisition offer it received from Bain Capital and China's Huawei Technologies from regulatory consideration by the federal Committee on Foreign Investment in the United States. After the deal was announced last September, it immediately drew questions about the role Huawei would play and how much of 3Com it would ultimately have the option to own. Soon after, national security concerns began to boil over Huawei's possible connections to the Chinese government and the sensitivity of data held by 3Com's Tipping Point software unit. What's next for 3Com? It had been rumored to be on the block for a while before the Bain/Huawei offer was announced, and perhaps larger vendors with enterprise interests could again be considered potential buyers.

Meanwhile, The New York Times story we're linking to talks about private equity buyouts being on the skids. There have been many private equity acquisitions in telecom the last year or so, with a couple announced already this year. General economic imbalance hasn't previously been perceived to be a threat to these deals, so it will be interesting to see if the action keeps up or begins to wane.

For more:
- read this story at The New York Times

Related articles:
- It was reported last fall that Huawei could boost its 3Com stake to 21.5%

3Com update: Huawei ownership mystifies

Mon, 07 Jan 2008 06:59:56 -0500

Following up on some news from last week, Congress' Committee on Foreign Investment in the United States reportedly is set to extend its review of the proposed acquisition of 3Com by Bain Capital and Huawei Technologies. The $2.2 billion deal planned by the private equity firm and the Chinese vendor would give Bain 83.5% ownership of 3Com and Huawei 16.5%, with an option for Huawei to grow its piece to 21%. Bain has noted control of the company would remain in the hands of U.S. based management, but Congress wants more details about who or what individuals or groups actually constitute the ownership of "privately-owned" Huawei.

For more:
- read this story in The Washington Post

Related articles:
- Bain and Huawei announced the 3Com buyout last September

ALSO NOTED: Netgear recalls Ethernet adapter; Fed committee eyes 3Com deal; and much more...

Fri, 04 Jan 2008 06:59:51 -0500

> Netgear recalls powerline Ethernet adapter targeted at European market. Article

> The Committee on Foreign Investment in the United States is reportedly investigating the pending acquisition of 3Com. Article

> Rural telco Consolidated Communications plans IPTV for North Pittsburgh. Article

Huawei can boost 3Com stake

Mon, 15 Oct 2007 06:59:55 -0400

Chinese vendor Huawei Technologies is a supporting partner in Bain Capital $2.2 billion proposal to acquire 3Com (Huawei would end up owning 16.5% of 3Com if the deal is completed). However, according to documents filed with the Securities and Exchange Commission, Huawei has the option to expand its stake in the company to 21.5% and gain up to 11 board seats.

This may raise more flags for people who are opposed to the deal. This includes a group of U.S. legislators who are concerned the deal would give a company closely connected to the Chinese government an ownership stake and board seats in a large U.S. firm, and could be a threat to U.S. national security.

For more:
- MSNBC carries the Financial Times story
- MSNBC also has a Financial Times story on opposition to the deal

Related articles:
- The Bain/Huawei takeover of 3Com was announced late last month

Price, performance cloud 3Com deal

Mon, 01 Oct 2007 06:59:54 -0400

3Com announced last Friday that it had agreed to be acquired by private equity firm Bain Capital and vendor Chinese vendor Huawei Technologies for about $2.2 billion. The deal is being led by Bain, with Huawei as a minority partner.

Follow up reports on the deal have noted that the sale price of 3Com was actually fairly close to the current value of H3C, the former joint venture between 3Com and Huawei that 3Com bought its partner out of last year. The price of last week's acquisition would suggest the rest of 3Com was bought at a bargain price. Meanwhile, analysts observing the deal say it provides relief for a consistently under-performing company.

For more:
- Light Reading analyzes the H3C angle
- Telephony also follows the story

Huawei, Bain in $2.2 bln 3Com LBO

Fri, 28 Sep 2007 06:59:56 -0400

Rumors circulated all summer about possible suitors for networking pioneer 3Com, and though Nortel Networks was the potential buyer most often mentioned, China's Huawei Technologies certainly has been considered in the mix. Now, 3Com is being purchased by Huawei and Bain Capital for $2.2 billion.

This looks like yet another leveraged buyout teaming a telecom company with a private equity firm. It will be interesting to see what that means for how 3Com continues to be operated, and to what degree its technologies will be integrated with Huawei's. Who said the LBO resurgence had run its course?

For more:
- Here's the breaking story in The New York Times

Deal rumors: Buyer interest in 3Com; Huawei and CAC

Wed, 18 Jul 2007 06:59:53 -0400

Telecom vendor consolidation has been continuing at a healthy pace since AT&T's 2006 acquisition of BellSouth--which signaled a shift in the telco universe toward fewer carrier customers and (probably) less telco capex for the time being. Now, comes rumors of two more possible deals. 3Com supposedly has drawn acquisition interest from parties that include private equity firms and Nortel Networks. Meanwhile, another report suggested Huawei may be interested in acquiring Carrier Access Corp.

The 3Com possibility is intriguing in part because if it ends up in private hands, it would follow not long on the heels of the acquisition of 3Com competitor Avaya by a private equity firm. Private equity money has been flowing into public telecom vendors and service providers of late, with Alltel having agreed to be bought by Goldman Sachs and TPG Capital, and Bell Canada being the target of a private consortium.

What's less clear is how privatization may change these firms. Will the PE guys strip-mine the firms' cash flow resources to realize big, but short-term margins, or will they actually invest to create more long-term value for another eventual sale or spin-off?

For more about the 3Com rumors:
- read this blog entry from The Wall Street Journal (Sub. req.)

For speculation on Huawei's potential interest in CAC:
- check out this Light Reading blog entry