3Com spins off IP networks business

More major changes at 3Com, with the announcement of the creation of CommWorks Corporation, a wholly owned subsidiary to handle its network service provider customers.

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By  Mark Sutton Published  December 23, 2000

More major changes at 3Com, with the announcement of the creation of CommWorks Corporation, a wholly owned subsidiary to handle its network service provider customers.

3Com Corporation has announced plans to create a separate enterprise to serve network service providers. CommWorks Corporation will build IP networks for network service providers for provision of voice and data services over DSL.

CommWorks will be headed by Irfan Ali, previously senior VP and general manager of 3Com Carrier Networks Business. As a wholly owned subsidiary of 3Com, CommWorks will service existing business in the service provider market with a range of multi-service hardware platforms and modular software components for next generation IP services.

“We are a global leader in IP-based networking solutions for service providers,” said Ali. “CommWorks networking solutions are already deployed by many of the world’s leading carriers and service providers. We will build on these successes to deliver new and advanced networking solutions to enable carriers to reduce time to market, differentiate their services from competitive offerings and cost effectively migrate to next generation networks.”

The move marks yet another restructuring for 3Com this year. 3Com president and COO Bruce Claflin said the move will allow both CommWorks and the remaining commercial/consumer business to focus on serving their markets more cost effectively.

After an initial charge of $40-60 million in restructuring costs, cost savings of $200-250 million per annum are predicted, resulting in operating profitability by Q1 2002.

“3Com intends to have two growth businesses, each of which generates superior financial returns,” Claflin said.

“We are committed to obtaining the benefits of focus, while investing in leadership products and services which drive profitable growth. All these actions are intended to create increased shareholder value. CommWorks will have the freedom and resources necessary for success in the carrier marketplace, while leveraging the financial and technical strengths of 3Com Corporation.”

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