Updated from 10:32 a.m. ET

3Com

(COMS)

plans to cut about 900 full-time employees as a result of the U.S. economic downturn and the spending slowdown in the telecommunications industry.

The company expects today's announcement to be "the first step" toward improving cost effectiveness and operational efficiency. 3Com will continue to focus on cost reductions in employment, discretionary spending, product costs and savings in plant, property and equipment.

3Com is firing about 10% of its 9,200 employees, while 300 of the company's 2,500 contract workers and consultants will be eliminated.

Shares of the Santa Clara, Calif., networking products provider recently gained 28 cents, or 3.1%, to $9.31 in

Nasdaq

trading.