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Contributors: Douglas McIntyre Jon C. Ogg

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Thursday, October 05, 2006

Is There More 3Com & Huawei Partnership News Coming?

3Com (COMS) is up big today. There are various rumors in the market that the company may have an expanded pact with Huawei in its "H-3C" venture, and some even more extended rumors of a buyout. There have been recent indications that 3Com wants to increase its ownership in the H-3C venture from its 51% to a higher level.

There was news out this week about its new unified all-in-one switch for small and mid-sized businesses and there was an article saying that relatively new CEO Edgar Masri was calling on partners to build up their solutions focus and vertical market expertise.

We have been critical of the company in the past, and even offered a path for the company to follow. Since it already holds a 51% stake in "H-3C" it would be advisable for the company to try to actually get a stake in the Huawei parent itself. This would cause a thunderous cheer from analysts, and would make other router and switch sellers cringe. COMS now counts all the revenues of the "H-3C" partnership as its own since it owns 51% of the venture, so if it could secure a stake in the Huawei company itself.

Some may try to say it is buyout rumors and you never know what rumors will end up surfacing by the end of the day. COMS is now up 13% on almost 10 million shares, and it has just crossed back over the $5.00 mark.

Here is what has been on our site recently:

Is There an Underlying Value to 3Com? Maybe a Backdoor Play

3Com Earnings Preview: Time to Do or Die

3Com's Huawei Venture Buys the Company More Time (COMS)

Jon C. Ogg
October 5, 2006

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