3Com Reports Fourth Quarter and Full-Year Results for Fiscal 2008

MARLBOROUGH, Mass., Jun 24, 2008 (BUSINESS WIRE) ----3Com Corporation (NASDAQ: COMS) today reported financial results for its fiscal 2008 fourth quarter, which ended May 30, 2008. Revenue in the quarter was $321.3 million compared to revenue of $310.9 million in the corresponding period in fiscal 2007, a 3 percent increase. For the full year, revenue was $1.29 billion compared to full-year fiscal 2007 revenue of $1.27 billion, an increase of 2 percent.

"In FY08 we made progress in several key areas, including growing revenue year-over-year in almost every region, increasing our gross margins and generating cash from operations," said 3Com CEO Bob Mao. "To build on these improvements, we must increasingly operate as one global enterprise. Integration of our worldwide operations will support our goals of profitable revenue growth and increasing market share, as well as result in cost savings."

Net loss in the quarter was $166.7 million, or $0.41 per share, compared with a net loss of $66.2 million, or $0.17 per share, in the fourth quarter of fiscal year 2007. In the fourth quarter of fiscal 2008, 3Com recorded a non-cash goodwill impairment charge of $158.0 million, or $0.39 per share, arising from the company's 2005 acquisition of TippingPoint. 3Com's recent stock price decline triggered an impairment evaluation required by applicable accounting regulations. The net loss in the quarter increased primarily due to the impairment charge, offset by the absence of certain one-time charges in the prior-year period. On a non-GAAP basis, net income was $35.6 million, or $0.09 per diluted share, compared with net income of $4.6 million, or $0.01 per diluted share, for the fourth quarter of fiscal year 2007.

For fiscal year 2008 3Com incurred a net loss of $228.8 million, compared with a net loss in fiscal year 2007 of $88.6 million. The increase in the net loss is primarily explained by the inclusion of the impairment charge, offset by the absence of certain one-time charges in the prior-year period. On a non-GAAP basis 3Com generated net income for the full year of $94.9 million, or $0.23 per diluted share, compared to net income of $18.5 million, or $.05 per diluted share, in fiscal 2007.

In the fourth quarter, 3Com generated $63.3 million in cash from operations. 3Com's cash and cash equivalents balance at May 30, 2008 was $503.6 million.

Management will host a conference call and Webcast at 5 p.m. EDT, Tuesday, June 24, 2008, to discuss the company's financial results. To participate on the call, U.S. and international parties may dial 719-325-4788. Alternatively, interested parties may listen to the live broadcast of the call over the Internet at 3Com's Investor Relations Web site (www.3com.com/investor) in the Earnings Webcast section.

For those unable to participate on the live call, a 24-hour replay will be available starting at 8:00 p.m. EDT on June 25, 2008 by dialing (719) 457-0820 or (888) 203-1112, Confirmation Code: 1308284. A replay also will be available over the Internet at 3Com's Investor Relations Web site (www.3com.com/investor) in the Earnings Webcast section. The replay will be available for approximately three weeks after posting.

For additional financial information, please refer to the Investor Relations section of our Web site.

Safe Harbor

This news release contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including forward-looking statements regarding our business objectives and goals, potential cost savings and integration. These statements are neither promises nor guarantees, but involve risks and uncertainties that could cause actual results to differ materially from those set forth in the forward-looking statements, including, without limitation, risks relating to: our ability to grow profitably, expand outside of China, maintain and expand in China, improve expense controls while making investments to grow and other risks detailed in the Company's filings with the SEC, including those discussed in the Company's quarterly report filed with the SEC on Form 10-Q for the quarter ended February 28, 2008.

3Com Corporation does not intend, and disclaims any obligation, to update any forward-looking information contained in this release or with respect to the announcements described herein.

The non-GAAP measures used by the Company exclude restructuring, amortization, in-process research and development, stock-based compensation expense and, if applicable in the relevant period, unusual items, such as those detailed in the tables attached to this press release. The required reconciliations and other disclosures for all non-GAAP measures used by the Company are set forth later in this press release, in the Current Report on Form 8-K furnished to the SEC on the date hereof and/or in the investor relations section of our Web site, www.3com.com.

References to the financial information included in this news release reflect rounded numbers and should be considered approximate values.

About 3Com Corporation

3Com Corporation (NASDAQ: COMS) is a leading provider of secure, converged voice and data networking solutions for enterprises of all sizes. 3Com offers a broad line of innovative products backed by world class sales, service and support, which excel at delivering business value for its customers. 3Com also includes H3C Technologies Co., Limited (H3C), a China-based provider of network infrastructure products. H3C brings high-performance, cost-effective product development and a strong footprint in one of the world's most dynamic markets. Through its TippingPoint division, 3Com is a leading provider of network-based intrusion prevention systems that deliver in-depth application protection, infrastructure protection, and performance protection. For further information, please visit www.3com.com, or the press site www.3com.com/pressbox.

Copyright (C) 2008 3Com Corporation. 3Com, the 3Com logo and TippingPoint are registered trademarks and H3C is a trademark of 3Com Corporation or its wholly owned subsidiaries. All other company and product names may be trademarks of their respective holders.

   3Com Corporation Condensed Consolidated Statements of Operations (in thousands, except per share data) (unaudited) TABLE A
   Three Months Ended Twelve Months Ended -------------------- ----------------------- May 30, June 1, May 30, June 1, 2008 2007
   2008 2007 ---------- --------- ----------------------- Sales $ 321,254 $310,920 $1,294,879 $1,267,481 Cost of sales 147,529
   172,483 640,424 689,027 ---------- --------- ----------- ----------- Gross profit 173,725 138,437 654,455 578,454 Operating
   expenses: Sales and marketing 78,402 89,048 316,019 319,696 Research and development 51,614 71,268 206,653 215,632 General
   and administrative 50,310 28,791 129,116 93,875 Amortization of intangibles 25,626 7,897 103,670 42,525 Goodwill impairment
   157,977 - 157,977 - In-process research and development - 34,053 - 35,753 Restructuring charges 193 718 4,501 3,494 ----------
   --------- ----------- ----------- Total operating expenses 364,122 231,775 917,936 710,975 ---------- --------- -----------
   ----------- Operating loss (190,397) (93,338) (263,481) (132,521) Gain on investments, net 109 344 460 1,143 Interest (expense)
   income, net (2,675) 7,598 (13,087) 40,863 Other income, net 11,370 11,780 44,364 38,291 ---------- --------- ----------- -----------
   Loss from operations before income taxes and minority interest of consolidated joint venture (181,593) (73,616) (231,744)
   (52,224) Income tax benefit (provision) 14,870 (5,126) 2,903 (10,173) Minority interest of Huawei in the income of consolidated
   joint venture (1) - 12,516 - (26,192) ---------- --------- ----------- ----------- Net loss $(166,723) $(66,226) (228,841)
   (88,589) ========== ========= =========== =========== Basic and diluted loss per share $ (0.41) $ (0.17) $ (0.57) $ (0.22)
   ========== ========= =========== =========== Shares used in computing basic and diluted per share amounts 401,922 395,988
   399,524 393,894 

(1) Represents Huawei's 49% interest in the H3C joint venture for the period of minority interest that ended with 3Com's acquisition of the remaining 49% interest on March 29, 2007.

 3Com Corporation Condensed Consolidated
   Balance Sheets (in thousands) (unaudited) TABLE B May 30, June 1, 2008 2007 ---------- ---------- ASSETS Current assets: Cash
   and equivalents $ 503,644 $ 559,217 Notes receivable 65,116 77,368 Accounts receivable, net 116,281 102,952 Inventories, net
   90,831 107,988 Other current assets 34,033 50,157 ---------- ---------- Total current assets 809,905 897,682 Property &
   equipment, net 54,314 76,460 Goodwill 609,297 766,444 Intangibles, net 278,385 371,289 Deposits and other assets 23,229 39,217
   ---------- ---------- Total assets $1,775,130 $2,151,092 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current
   liabilities: Accounts payable $ 90,280 $ 110,430 Current portion of long-term debt 48,000 94,000 Accrued liabilities and other
   384,429 435,638 ---------- ---------- Total current liabilities 522,709 640,068 Deferred taxes and long-term obligations 4,119
   23,725 Long-term debt 253,000 336,000 Stockholders' equity 995,302 1,151,299 ---------- ---------- Total liabilities and stockholders'
   equity $1,775,130 $2,151,092 ========== ========== 

 3Com Corporation Reconciliation of Non-GAAP Measures (in thousands,
   except margin and per-share data) (unaudited) TABLE C Three Months Ended Twelve Months Ended -------------------- ---------------------
   May 30, June 1, May 30, June 1, 2008 2007 2008 2007 ---------- --------- ---------- ---------- GAAP operating loss $(190,397)
   $(93,338) $(263,481) $(132,521) Restructuring 193 718 4,501 3,494 Amortization of intangible assets 25,626 7,897 103,670 42,525
   In-process research and development (a) - 34,053 - 35,753 Impacts to cost of sales from purchase accounting adjustments to
   inventory (b) - 63 11,176 63 Patent litigation success fee (c) 9,000 - 9,000 - VAT recovery dispute (d) 6,069 - 6,069 - IPO
   fees write-off (e) 4,864 - 4,864 - Goodwill impairment (f) 157,977 - 157,977 - EARP change in control expense (g) - 57,308
   - 57,308 Stock-based compensation expense (h) 9,793 4,962 25,206 20,095 Acquiree expensed acquisition costs (i) 43 - 10,631
   - ---------- --------- ---------- ---------- Non-GAAP operating income $ 23,168 $ 11,663 $ 69,613 $ 26,717 ========== =========
   ========== ========== GAAP net loss $(166,723) $(66,226) $(228,841) $ (88,589) Restructuring 193 718 4,501 3,494 Amortization
   of intangible assets 25,626 7,897 103,670 42,525 In-process research and development (a) - 34,053 - 35,753 Impacts to cost
   of sales from purchase accounting adjustments to inventory (b) - 63 11,176 63 Huawei's 49% minority interest in H3C's amortization
   as shown above - (30,256) - (41,913) Patent litigation success fee (c) 9,000 - 9,000 - VAT recovery dispute (d) 6,069 - 6,069
   - IPO fees write-off (e) 4,864 - 4,864 - Goodwill impairment (f) 157,977 - 157,977 - EARP change in control expense (g) -
   57,308 - 57,308 Stock-based compensation expense (h) 9,793 4,962 25,206 20,095 Acquiree expensed acquisition costs (i) 43
   - 10,631 - Gain on sales of assets (j) - - (6,155) (1,300) Gain on sale of investment portfolio (k) - - - (2,000) (Gain) loss
   on insurance settlement (l) - (3,908) 2,066 (6,908) Tax reserve release (m) (11,284) - (11,284) - Charge related to change
   in tax rates (n) - - 6,056 - ---------- --------- ---------- ---------- Non-GAAP net income $ 35,558 $ 4,611 $ 94,936 $ 18,528
   ========== ========= ========== ========== GAAP net loss per share $ (0.41) $ (0.16) $ (0.57) $ (0.22) Restructuring 0.00
   0.00 0.01 0.01 Amortization of intangible assets 0.06 0.02 0.26 0.11 In-process research and development (a) - 0.09 - 0.09
   Impacts to cost of sales from purchase accounting adjustments to inventory (b) - 0.00 0.03 0.00 Huawei's 49% minority interest
   in H3C's amortization as shown above - (0.08) - (0.10) Patent litigation success fee (c) 0.02 - 0.02 - VAT recovery dispute
   (d) 0.02 - 0.02 - IPO fees write-off (e) 0.01 - 0.01 - Goodwill impairment (f) 0.39 - 0.39 - EARP change in control expense
   (g) - 0.14 - 0.14 Stock-based compensation expense (h) 0.03 0.01 0.06 0.05 Acquiree expensed acquisition costs (i) 0.00 -
   0.03 - Gain on sales of assets (j) - - (0.02) (0.00) Gain on sale of investment portfolio (k) - - - (0.01) (Gain) loss on
   insurance settlement (l) - (0.01) 0.01 (0.02) Tax reserve release (m) (0.03) - (0.03) - Charge related to change in tax rates
   (n) - - 0.01 - ---------- --------- ---------- ---------- Non-GAAP net income per share, diluted $ 0.09 $ 0.01 0.23 0.05 ==========
   ========= ========== ========== Shares used in computing diluted per share amounts 406,139 401,334 404,193 399,680 GAAP net
   loss margin -51.9% -21.3% -17.7% -7.0% Restructuring 0.1% 0.2% 0.3% 0.3% Amortization of intangible assets 8.0% 2.5% 8.0%
   3.4% In-process research and development (a) 0.0% 11.0% 0.0% 2.8% Impacts to cost of sales from purchase accounting adjustments
   to inventory (b) 0.0% 0.0% 0.9% 0.0% Huawei's 49% minority interest in H3C's amortization as shown above 0.0% -9.7% 0.0% -3.3%
   Patent litigation success fee (c) 2.8% 0.0% 0.7% 0.0% VAT recovery dispute (d) 1.9% 0.0% 0.5% 0.0% IPO fees write-off (e)
   1.5% 0.0% 0.4% 0.0% Goodwill impairment (f) 49.2% 0.0% 12.2% 0.0% EARP change in control expense (g) 0.0% 18.4% 0.0% 4.5%
   Stock-based compensation expense (h) 3.0% 1.6% 1.9% 1.6% Acquiree expensed acquisition costs (i) 0.0% 0.0% 0.8% 0.0% Gain
   on sales of assets (j) 0.0% 0.0% -0.5% -0.1% Gain on sale of investment portfolio (k) 0.0% 0.0% 0.0% -0.2% (Gain) loss on
   insurance settlement (l) 0.0% -1.2% 0.2% -0.5% Tax reserve release (m) -3.5% 0.0% -0.9% 0.0% Charge related to change in tax
   rates (n) 0.0% 0.0% 0.5% 0.0% ---------- --------- ---------- ---------- Non-GAAP net income margin 11.1% 1.5% 7.3% 1.5% ==========
   ========= ========== ========== (a) In-process research and development from our acquisition of Roving Planet. (b) Results
   from our 49% H3C acquisition transaction. (c) Success fee for patent litigation. (d) Disputed VAT recovery receivable no longer
   deemed collectible. (e) Write-off capitalized costs of proposed IPO. (f) Goodwill impairment related to loss in value of a
   reporting unit. (g) These charges represent the initial portion of the Equity Appreciation Rights Plan for H3C employees triggered
   by 3Com's acquisition of the remaining 49% ownership of H3C. They are included in the following cost and expense categories
   by period: Three and Twelve Months Ended -------------------- May 30, June 1, 2008 2007 ---------- --------- Cost of sales
   - 5,716 Sales and marketing - 17,727 Research and development - 27,230 General and administrative - 6,635 (h) Stock-based
   compensation expense is included in the following cost and expense categories by period: Three Months Ended Twelve Months
   Ended -------------------- --------------------- May 30, March 2, May 30, June 1, 2008 2007 2008 2007 ---------- ---------
   ---------- ---------- Cost of sales 731 457 2,134 1,576 Sales and marketing 1,830 1,398 5,976 5,756 Research and development
   1,199 848 3,993 4,621 General and administrative 6,033 2,259 13,103 8,142 (i) These expenses relate to the proposed acquisition
   of the Company in September 2007, the deal was terminated by the acquisitioner in April 2008. (j) The gain relates to patent
   sales in fiscal 2008 and a patent sale in fiscal 2007. (k) This gain relates to the sale of our venture investment portfolio.
   (l) This loss relates to the recording of final costs associated with our Hemel facility in fiscal 2008. Fiscal 2007 relates
   to insurance settlements received for the Hemel facility. (m) This gain relates to the release of tax reserves due to settlements
   with foreign tax authorities. (n) This expense relates to a $6.1 million non-cash deferred tax liability provision in the
   PRC to reflect an increase in statutory tax rates. 

SOURCE: 3Com Corporation

3Com Corporation Media &
   Investor Relations John Vincenzo, 508-323-1260 john_vincenzo@3com.com or Media Relations Kevin Flanagan, 508-323-1101 kevin_flanagan@3com.com
   

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