3Com Reports Fourth Quarter and Annual Fiscal Year 2007 Results.

* GAAP revenue for the fourth quarter was approximately $311 million, a 22 percent increase over the prior year quarter's GAAP revenue. GAAP revenue for the full year was $1.3 billion;

* GAAP operating loss in the quarter was $93 million, including $91 million in charges related to the closing of the H3C transaction;

* Non-GAAP operating profit was $12 million, which is the third consecutive quarter of non-GAAP operating profitability; and

* Cash flow from operations was $71 million for the quarter and $166 million for the fiscal year.

MARLBOROUGH, Mass. -- 3Com Corporation (NASDAQ: COMS) today reported consolidated financial results for its fourth quarter of fiscal year 2007, which ended June 1, 2007, including the results for its two operating segments, Secure, Converged Networking (SCN) and H3C.

Revenue

Revenue determined in accordance with U.S. Generally Accepted Accounting Principles (GAAP) was approximately $311 million in the fourth quarter of fiscal 2007, a 22 percent increase compared to the same period in fiscal 2006. This growth is primarily due to the full consolidation of H3C revenue in the current period, which contains an extra month of H3C's results compared with the prior year period. Revenue grew four percent compared to pro forma revenue in the prior-year period, which includes the results of H3C as if it had been fully consolidated during the prior-year period.

The H3C segment revenue was approximately $176 million, a 13 percent increase over the prior-year quarter pro forma non-GAAP segment results, and the SCN segment revenue was $163 million, a two percent decrease compared to the prior-year fourth quarter. The level of year-over-year decline in SCN decreased during the fourth quarter as compared to the first three quarters of the fiscal year. During the fourth quarter the North America region had seven percent revenue growth over the prior-year period. This was driven by growth in the networking and security categories partially offset by decreased sales of the legacy connectivity products.

Full year GAAP fiscal 2007 revenue was $1.3 billion, a 59 percent increase compared to GAAP fiscal 2006 due primarily to the consolidation of H3C's results in the current period. On a pro forma basis, assuming H3C had been consolidated from the beginning of the periods, full fiscal year 2007 revenue would have increased 11 percent.

Gross Profit and Operating Loss - GAAP Basis

3Com's gross profit for the fourth quarter of fiscal 2007 was $138 million, or 45 percent of revenue, which is a one percentage point improvement compared to the prior-year quarter, driven primarily by the inclusion of a full three months of H3C in the current period results as well as improvements in the SCN segment. GAAP operating loss was $93 million versus an operating loss of $21 million in the fourth quarter of fiscal 2006. The increase in GAAP operating loss included $91 million in charges related to the closure of the H3C acquisition, including $57 million in current period charges associated with the previously disclosed change-of-control portion of the H3C Equity Appreciation Rights Plan, or EARP. The GAAP operating loss also included $34 million associated with in-process R&D charges for the H3C transaction.

Non-GAAP Operating Income(1)

Non-GAAP operating income was $12 million in the fourth quarter of fiscal 2007, an improvement of $18 million compared to the prior-year fourth quarter's non-GAAP operating loss of $6 million.

Net Loss and EPS - GAAP basis

The fourth quarter fiscal 2007 net loss was $66 million, or $0.17 per share, of which $63 million represents 3Com's portion of costs related to the acquisition of H3C. Net loss includes restructuring, amortization, in-process R&D and stock-based compensation expense totaling $48 million, or $0.12 per share, and 3Com's portion of the change-of-control EARP payment of $29 million or $0.07 per share. In the same period of the prior year, the net loss was $15 million, or $0.04 per share, including restructuring, amortization, in-process research and development and stock-based compensation expense of $15 million, or $0.04 per share2.

Edgar Masri, 3Com's President and CEO, said "3Com's overall performance in the fourth quarter concluded a successful year in which the Company significantly improved its strategic position, global execution and financial performance. For the third consecutive quarter, 3Com delivered positive non-GAAP operating profitability, and Fiscal 2007 marked the first time in four years that 3Com has delivered positive cash flow from operations on a full year basis. We also showed great discipline in our SCN segment, reducing net loss by approximately 30 percent year over year, on full year performance."

"Looking ahead, we believe that 3Com is well positioned to capitalize on the large and growing market opportunity for secure, converged networks," continued Masri. "We are committed to a goal of balancing cost containment with profitable revenue growth across all aspects of our business, and we believe we can achieve this based on H3C's continued growth, the progress being made in the integration of H3C and the improved performance of our SCN operating segment."

Cash and Short-Term Securities

3Com ended the quarter with $559 million in cash, cash equivalents and short-term investments. The net decrease of $397 million from the balance at the end of the previous quarter was driven primarily by $473 million in payments related to the acquisition of the remaining portion of H3C, offset by strong cash flow from operations of $71 million.

Fourth Quarter 2007 Business Highlights

* Completed the integration of H3C and 3Com Sales and Marketing in Latin America.

* H3C had several product development achievements in the quarter such as: its iVS IP video surveillance solution passed standard testing for China Telecom Global E-eye project V2.0, released its IX1500 storage product, supporting SAS technology, and released its DL1000 virtual tape library (VTL) product for disaster back-up market.

* H3C won accounts including: China Life Insurance (Group) Company, (Security and switches), Shenzhen Nanshan E-government, (Storage and switches), Agriculture Bank of China (Switches), Safe China - Fushun City, (IP surveillance, Storage and switches), Xinhua News Agency, China (Wireless, software and switches, Wireless LAN), CJSC "Corvette Telecom," Russia (Switches), ALSTOM, France (Switches), Beijing Public Transportation Company (IP surveillance), Zhejiang Communications Investment Group Co., Ltd, China (Routers, switches, security and software) and The Chinese University of Hong Kong (Switches).

* 3Com won accounts in key vertical markets including: Belfast City Council, Ireland (VCX and switches); Ministry of Finance, Lebanon (switches and routers); Modrus, UK (VCX and NBX); Hyundai Construction (switching); Angus & Robertson (VCX); German Malaysian Institute (modular core switching).

* Announced the launch of the X-Family unified security solution.

* TippingPoint sold its Intrusion Preventions Systems and NAC solutions to customers including: American Red Cross, Hawaii Department of Education, Philadelphia Schools (NAC), REWE Group and Virginia State Supreme Court.

* Marc Willebeek-LeMair was named one of the technology industry's Top 25 Chief Technology Officers by InfoWorld, a leading technology publication.

Conference Call

Management will host a conference call and webcast at 5 p.m. EDT today to discuss quarterly and annual highlights, historical financial results and expectations of future performance. To participate on the call, U.S. and international parties may dial [phone]. 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.

Safe Harbor

This press 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 future strategy, integration and financial goals. 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 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 March 2, 2007.

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.

References to the financial information included in this press release and the related conference call 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. 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. 3Com also owns H3C Technologies Co., Limited (H3C), a China-based provider of network infrastructure products. H3C brings innovative and cost-effective product development and manufacturing and a strong footprint in one of the world's most dynamic markets. For further information, please visit www.3com.com, or the press site www.3com.com/pressbox.

Copyright (c) 2007 3Com Corporation. 3Com and the 3Com logo are registered trademarks and TippingPoint is a trademark of 3Com Corporation. All other company and product names may be trademarks of their respective holders

1 The non-GAAP operating income and loss 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 the change-in-control portion of the EARP. The required reconciliations and other disclosures used for all non-GAAP measures by the Company are set forth later in this press release in Table D, 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.

2 Our results for the year ago period include stock-based compensation expense primarily related to restricted stock amortization and stock-based compensation costs associated with acquisitions. Our results for the current period also include the effects of our adoption of FAS 123R.

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