3Com Claims Progress In Channel Efforts

"We are bringing them on, but we are being very different about it," Claflin said during a conference call with analysts regarding the company's third-quarter financial results.

He said the company would not announce any new relationships until contracts were signed and products were certified and sold to paying customers. "At that time, we will announce new relationships—and only if they are strategic," he said.

3Com jumped the gun in announcing its partnership with integrator EDS at the end of 2003 before the companies had completed steps such as product testing, template development and training. That "created expectations that were not realized by our investors, or, frankly for that matter, by us," Claflin said.

Claflin said the company was also making headway on plans to revitalize existing channel relationships. Last fall the company began an overhaul of its channel program to reward partners for building expertise and developing value-added services around 3Com products.

"If you're a partner who's going to invest in a high-end enterprise sale and the technologies that go into it, we now give a consciously different level of financial return to that partner than would have been the case if all they were doing was just moving boxes," Claflin said.

3Com reported a slimmer loss, but a 6 percent drop in sales, for its third quarter ended Feb. 25 over the prior-year period. 3Com lost $53 million on sales of $161.2 million, compared with a loss of $85.6 million on sales of $171.8 million.

Claflin pointed to several "encouraging indicators," including sequential and year-over-year revenue growth in North America, a region he said had been struggling in past quarters.

Sales included approximately $148 million from enterprise networking products and $13 million from connectivity products. Enterprise networking revenue declined 1 percent from the same quarter a year ago, while sales of connectivity products decreased 40 percent.

3Com has said it expects connectivity revenue to continue to decline as it puts more focus on higher-margin security, VoIP and enterprise networking products.

3Com also completed its acquisition of security vendor TippingPoint during the quarter. The company ended the quarter with approximately 1,900 employees, up from 1,825 at the end of the second quarter.

Shares of 3Com Thursday were up 3 cents after the announcement, closing at $3.55.