Could Huawei/Bain end Cisco's win streak?

Craig Matsumoto, Editor-in-Chief, Light Reading

September 28, 2007

2 Min Read
3Com: It's Done

12:20 PM -- After a lifetime of getting slapped down by Intel Corp. (Nasdaq: INTC), then Cisco Systems Inc. (Nasdaq: CSCO), then Cisco again, 3Com Corp. (Nasdaq: COMS) is finally getting sold. (See Huawei, Bain Buy 3Com.)

Huawei Technologies Co. Ltd. and Bain Capital announced the $2.2 billion cash deal ($5.30 per share) this morning, possibly shouting down Nortel Networks Ltd. , The Wall Street Journal says.

3Com's stock shot up immediately this morning. Shares climbed $1.31 (35.5%) to $4.99 as of this writing, giving 3Com a valuation of just about $2 billion even.

The most interesting pieces of 3Com are the TippingPoint security products -- which could still be spun off -- and the H3C Technologies Co. Ltd. joint venture, which 3Com took over in November, paying $882 million. (See 3Com Takes the H3C Plunge.) 3Com still sells stackable Ethernet switches, but it's unclear whether anybody cares.

Forget the products for a moment, though. The deal marks the final goodbye for a fallen Silicon Valley star. 3Com's headquarters are long gone, to Massachusetts. Its old building off Highway 237 bears a Marvell Technology Group Ltd. (Nasdaq: MRVL) logo now. (See Marvell Ascending.) Most of its workforce is in China.

I remember being at a financial conference years ago when, at the end of a session, an analyst tossed out, "We'll be taking a break now. Refreshments are in the hallway. Also, 3Com has just bought U.S. Robotics." A $6.6 billion deal. 3Com's CFO happened to be attending the conference, and he gave some generous time to the press late that afternoon.

Now it's Huawei's turn to go after Cisco. "It’s an exciting deal, and finally, Cisco would need to sit up and watch!" consultant Sramana Mitra comments on his blog.

Would it? Cisco took notice of low-cost Asian competition at least three years ago, and it's been shifting its business model accordingly. It could be that H3C eventually takes a sizable chunk of the router market, while Cisco moves on to a higher-margin Web 2.0 existence. (See Cisco CEO Talks $10B Markets and Chambers at NXTcomm.)

— Craig Matsumoto, West Coast Editor, Light Reading

About the Author(s)

Craig Matsumoto

Editor-in-Chief, Light Reading

Yes, THAT Craig Matsumoto – who used to be at Light Reading from 2002 until 2013 and then went away and did other stuff and now HE'S BACK! As Editor-in-Chief. Go Craig!!

Subscribe and receive the latest news from the industry.
Join 62,000+ members. Yes it's completely free.

You May Also Like