3Com topped analysts' estimates in its fourth quarter Tuesday but still posted a loss of US$146.8 million, or 42 cents a share, on sales of US$763.7 million.
A survey of analysts by First Call predicted the network-equipment maker would lose 44 cents a share in the quarter.
Ahead of the earnings report, 3Com shares closed off 1 11/16 to 48 11/16.
Last quarter, 3Com announced an ambitious restructuring plan that would result in an operating loss in the quarter.
This quarter's results also marks the first quarter it has not include the results from its Palm spin-off.
Company officials braced the Street for this quarter's lackluster results, predicting sales of between US$675 million to US$750 million and an operating loss of between US$450 million to US$500 million.
While the US$763.7 million in sales was slightly above its previous estimate, it still represents a 38 percent decline from the year-ago quarter when it earned US$88 million, or 24 cents a share, on sales of US$1.23 billion.
The quarter's charges include a US$64.2 million pre-tax charge related to business realignment costs, a US$10.6 million pre-tax charge for purchased in-process technology, and a pre-tax gain of US$89.0 million from gains on investments.
"3Com's fourth quarter sales and operating losses were better than we projected," said CEO Eric Benhamou in a prepared release. "Given the magnitude of the changes implemented during the quarter, I am encouraged by our results and the progress we made on our transformation milestones."
Chase H&Q analyst Erik Suppiger predicted 3Com would lose 55 cents a share on sales of US$700 million.
Analysts had varying views on how 3Com would perform this quarter as loss estimates ranged from 28 cents a share to 60 cents a share.
In the fourth quarter, 3Com's sales of personal connectivity products such as network interface cards and broadband modems fell 26 percent from the year-ago quarter to US$410 million.
Sales of its network systems products, which include hubs, switches and LAN telephony gizmos, fell 48 percent from the year-ago quarter to US$353.7 million.
Last quarter, 3Com topped analysts' estimates, earning US$97.4 million, or 27 cents a share, on sales of US$1.4 billion.
Separately, 3Com said it would acquire Internet radio maker Kerbango for US$80 million.
Company officials said the deal will be accounted for as a purchase and is scheduled to close during the first fiscal quarter. The company said that the acquisition is not expected to affect fiscal results for fiscal 2001.
3Com shares rallied up to a 52-week high of 119 3/4 in February ahead of the Palm initial public offering. Its shares fell to a low of 22 5/8 in August.
Fourteen of the 24 analysts following the stock rate it either a "buy" or "strong buy."
Analysts are looking for a loss of 9 cents a share in fiscal 2001.
