3Com cans cable modems


Battered networking company 3Com is halting producton of cable modem line as part of a campaign to shut money-losing businesses.

The company blamed the move on "an industry-wide glut of consumer cable and DSL modems that has driven down prices and margins." The company said existing customer orders and warranties will be honored. 3Com's consumer DSL modem line will be discontinued as well.

Slow volume and hot competition has driven gross margins on cable modems to as low as 10%. Wholesale prices have fallen from $200 or so to around $130 and in some cases less than $100. Research firm Gartner Dataqest says 3Com is the second-largest cable modem manufacutrer, behind Motorola Broadband, but even with that scale 3Com still couldn't see profits in the near-term.

The company said sales for the quarter ending June would come in between $450 million to $475 million, far lower than the $550 million to $600 million the company had been predicting three months ago.
- John Higgins