Judge prohibits Xircom Inc. from shipping PC cards. (Up Front).

Analysts say Xircom Inc.'s future may be in doubt after a federal judge issued a preliminary injunction, barring the company from selling its high-tech networking cards.

Thousand Oaks-based Xircom, acquired last year by Intel Inc., was prohibited by U.S. District Judge Tena Campbell from manufacturing, distributing and selling 26 products, including Real Port and Real Port2 modems until a lawsuit filed by Santa Clara-based 3Com Corp. is resolved.

In her Aug. 1 ruling, Campbell said 3Com had shown sufficient evidence to "likely prevail in its case" against Xircom.

Xircom officials have denied any wrongdoing, but would not comment on the case.

Xircom has shipped adapters that connect portable PCs to corporate networks, online services and the Internet since 1989. Starting in 1999, the company has moved toward developing PC modem cards and PC port expansion systems, along with devices to access portable and desktop PCs.

PC cards, at the heart of the 3Com lawsuit, are now responsible for about two-thirds of the company's business.

Xircom's revenue and related numbers are not broken out from Intel's overall figures. The last year Xircom filed its own reports with the Securities and Exchange Commission was 2000 when it showed net income of $25 million on revenue of $496.2 million.

Intel acquired Xircom in 2001 for $748 million in cash at a time when the Conejo Valley PC card maker was expanding its product line into the wireless market for Palm Pilots. Those products are not impacted by the current suit.

3Com filed its suit in September 2000, alleging that Xircom illegally copied its technology in order to develop its own networking cards as part of its Real Port line.

According to court documents, Xircom denies it infringed on 3Com's copyright and sought to overturn Campbell's preliminary injunction, but failed. As a result, Campbell barred the company from selling its Real Port network cards and related products.

Jeremy Lopez, an analyst for MorningStar Inc., said that if 3Com's claims are upheld, the company's future is in doubt.

"The whole reason Intel acquired Xircom was for its share of the network card market," Lopez said, "and now it looks like it may be left out of that market anyway."

Mark Edelstone, an analyst with Morgan Stanley Dean Witter, was less certain of the impact, given Xircom is now under the wing of a larger corporate parent.

"It's a very small part of Intel, but it could be devastating for Xircom if they lose the case," he said.

Shawn Milne, an analyst for SoundView Technologies Inc., said that the current injunction may bar Xircom from selling its top products, but it does not necessarily spell the end of the company.

"You rarely have a case where a company will go under because a court case like this goes against it," he said, noting a settlement could limit the financial impact on Xircom.

Xircom has maintained that its Real Port PC cards were developed using its own technology and independent of any other similar product and an Intel spokesman said his company would appeal the judge's ruling.

Xircom filed a countersuit earlier this year against 3Com, accusing it of patent infringement with its Type III PC Card issued in fall 2000, claiming it was derived from Xircom's Real Port technology.

Randy Holiday, general counsel for Intel, said 3Com's suit is intended to deflect attention away from the case involving the Type III product.

3Com claims Xircom infringed on two sets of its patents to make computer modems and PC cards. One patent involves what 3Com calls a "contact block" that provides an electrical connection when a modular plug is inserted into a connector of a PC card. Another involves 3Com's Digital Line Guard.