3Com (COMS) Is Dead, Long Live 3Com

The 3Com Corp. you knew on September 27 is dead. A new 3Com is emerging, effective immediately. The former networking giant has been sold to affiliates of Bain Capital Partners for $2.2 billion in cash. The deal, pending regulatory approval, is long overdue, The VAR Guy believes. Here’s why.

Speculation about 3Com going private has been rampant in recent months. Back in July, The VAR Guy highlighted five reasons 3Com would need to sell itself to the highest bidder. Yes, current management has stabilized the company. But 3Com was one of the 50 worst performing stocks over the past decade.

A buyout should help 3Com to re-focus its efforts while trying to carve out a bigger niche for itself. No doubt competing with Cisco (at the high end), Linksys (at the low end) and a bevy of rivals in the mid-market (Adtran, D-Link, HP ProCurve, Netgear, Procurve) keeps 3Com and its offshore partner Huawei Technologies up at night.

3Com has to become a faster-moving company under its new ownership. One prime example: 3Com has been evaluating an open source strategy involving the Asterisk telephony software since at least February, The VAR Guy has reported.

Similar to Novell’s decision to acquire SuSE Linux a few years ago, 3Com could have led the Asterisk revolution had the company opened its wallet or at least inked a partnership with a company like Digium. Sources say a Digium/3Com relationship could still happen. Better late than never? We’ll see.

The 3Com buyout, meanwhile, is expected to close in 1Q of 2008, assuming it receives shareholder and regulatory approval.