3Com Shares Surge on Beat

MARLBOROUGH, Mass. (TheStreet) -- Networking specialist 3Com(COMS Quote) overcame a sales slump to beat analyst revenue and profit estimates in its first-quarter results, released early Thursday.

The news pushed the company's shares up 33 cents, or 6.9%, to $5.11 in early trading, outpacing the broader tech market, which rose 0.9%.

3Com, which competes with Cisco(CSCO Quote) and Hewlett-Packard(HPQ Quote), posted revenue of $290.5 million, down from $342.7 million in the prior year's quarter. Analysts surveyed by Thomson Reuters had expected sales of $278.15 million.

"We are pleased with 3Com's start to our new fiscal year," said Bob Mao, the 3Com CEO, in a statement released before market open. "We had a very good quarter, delivering solid revenue performance, improving gross margin over the prior year, and continuing to generate cash from operations."

The company's profit, however, took a big first-quarter hit. The company earned 2 cents a share on net income of $7.5 million, down from 20 cents a share and net income of $79.8 million the same period last year. The prior year's quarter, however, included $70 million from the resolution of a patent dispute, which boosted earnings by 17 cents a share.

Excluding items, 3Com earned 8 cents a share on net income of $30.6 million, compared with 11 cents a share and $43.4 million in the prior year's quarter. Analysts had expected earnings of 5 cents a share.

3Com recently bolstered its security story in an attempt to put the squeeze on Cisco and Juniper(JNPR Quote) and is also aggressively expanding its Chinese H3C subsidiary into the rest of the world.