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3Com looks to the Middle East for growth

Development of its business in the Middle East set to be a top priority for newly acquired networking firm.

Growing its business in the Middle East is set to be one of the top priorities for newly acquired networking firm 3Com, its chief financial officer Jay Zager has said.

In an exclusive interview with ITP.net, Zager said that the company, which was last week taken over by private investment firm Bain Capital, was planning to put a bigger focus on some of the emerging markets like some nations in the Middle East and Africa as part of its four-year growth strategy.

"We have identified the Middle East as an area where we think we can start to do a better job and put a little more focus in growing the business," he told ITP.net.

"There are two or three areas in the Middle East where we think there might be some outstanding opportunities and we're starting down the path right now of trying to explore how best to capture these," he added.

The region is currently only a small contributor of revenue to the US firm - roughly half of the company's turnover comes from its Chinese business Huawei-3Com - but 3Com plans to boost this by increasing its resources in the Middle East.

The firm, which has operated in the region since 1984, plans to open new offices, increase its headcount and strengthen its channel strategy in the region, Hamed Diab, general manager 3Com Middle East, told ITP.net recently.

It currently has offices in Dubai, Egypt and Saudi Arabia.

3Com announced last week it had agreed to be acquired by private investment firm Bain Capital for approximately $2.2 billion in cash.

Under terms of the deal, 3Com's former joint venture partner Huawei will hold a minority stake - reportedly 16.5% - in 3Com and become its commercial and strategic partner.

3Com and Huawei entered a joint venture agreement in 2003, which 3Com then dissolved in December 2006 by buying out Huawei's stake for $882 million.

Bain will not be involved in the daily running of 3Com, but is likely to be aggressive in pushing the company towards achieving its pre-stated financial targets and in strengthening its position in the network switches market against dominant player Cisco, the firm said.

3Com is aiming to grow its annual total revenue from $1.3 billion at present to $2 billion over the next four years, and to take its operating profit margins from 2% at present to 10% over that same period, Zager told ITP.net.

Product expansion, organic growth and acquisition are the other means the firm will employ to meet these goals, Zager said.

3Com's EMEA vice president and general manager Mike Ansley affirmed that the company was looking to increase its investment in the region.

"We're looking at geographic expansion in the third quarter, although I can't say where," he said.

Ansley said 3Com was targeting annual growth of 13%-14% in the Middle East in comparison to annual growth of 9%-10% for the rest of the EMEA region.