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            B R E A K F A S T   W I T H   T H E   F O O L
                     Tuesday, December 5, 2000

benjamin.rogers@enron.com
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3COM DISAPPOINTS
Can a cash-rich balance sheet offset a slowdown in orders?

By Rick Aristotle Munarriz

There was a time when 3Com (Nasdaq: COMS) networking equipment
and U.S. Robotics modems meant techie heaven. That time has long
since gone. Citing a shortage of parts and a slowdown in orders
from telco carriers, the company warned that third-quarter
results would come in softer than expected.

3Com is now projecting revenues for the period to come in
between $765 million and $780 million -- more than $100 million
below analyst estimates. A loss of $0.19 to $0.23 a share is
also nearly three times as wide as Wall Street's forecast for an
$0.08 deficit.

3Com had already begun to fade away from the investing community
radar. Once the company completed its spin-off of personal
desktop assistant maker Palm (Nasdaq: PALM) back in July, growth
investors had little reason to stick around. Standard & Poor's
felt the same way. It ditched the company in favor of its Palm
sprout for its S&P 500 Index.

While there are no guarantees, shareholders might take solace in
knowing that 3Com remains cash-rich. With $2.7 billion in cash
and short-term investments, the company is stacked with $7.75 a
share in greenbacks. In theory that should help limit the
downside not much farther below the $9.50 the stock was fetching
in after-hours trading yesterday. But even that may prove to be
knobby-kneed shelter if losses continue to widen. However, 3Com
believes that the carrier orders have simply been put on hold --
not hung up on the receiver. Shareholders better hope that 3Com
is making the right call this time.
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NEWS TO GO

A slowdown in orders will also be taking a toll on Xilinx
(Nasdaq: XLNX) this quarter. The specialty chip maker warned
that it too would be reporting revenues short of analyst
expectations. Like its rival Altera (Nasdaq: ALTR), who had
warned just last week, an inventory backlog will not be a
painless fix.

It's time to pay for play at MP3.com (Nasdaq: MPPP). The popular
digital music site has now unveiled a "Premier Service" upgrade
to its existing My.MP3.com listening solution. For $49.95 a
year, users can beam up to 500 CDs to their account and stream
as many as 300 songs in a row without interruption. While the
free service never capped the allowable discs, it did have to be
restarted after playing every 50 selections. So much for the
free music revolution -- though the free basic My.MP3.com
service seems set to continue.
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Finland's Nokia (NYSE: NOK) should give the wireless sector a
roaming charge this morning after the top dog announced that it
expects revenues to grow in the 25-35% range through at least
2003. Nokia controls nearly a third of the global wireless
handset market.

While weakness in online advertising is certainly not news
anymore, industry leader DoubleClick (Nasdaq: DCLK) confirmed
the malaise by sending out pink slips yesterday. The layoffs are
minor relative to other realignment sackings -- less than 10% of
its workforce -- but it does confirm the hard times in the realm of
Internet marketing. Brother, can you spare a banner ad click?

The thong throng? According to Bloomberg.com, News Corp. (NYSE:
NWS) and Disney (NYSE: DIS) have received European Council
approval to team up with Brazil's Globosat Programadora for a
joint venture in the latter's home turf. So an Australian media
giant teams up with a stateside titan and a local behemoth to
produce Brazilian television programming -- and Europe nods?
It's a small world after all.
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