New CEO Named at 3Com in wake of failed buyout

By: Mark Jewell
By: Mark Jewell


BOSTON (AP) -- Edgar Masri was removed as chief executive of data network equipment maker 3Com Inc. on Tuesday and immediately replaced by Robert Mao, a fluent Mandarin speaker who will be based in China, which the Massachusetts-based company sees as its biggest market.

The management shuffle - which comes a month after a proposed $2.2 billion buyout of 3Com was scuttled because of concern over a Chinese company's role - also brings in Ronald Sege to the new position of chief operating officer and as president of the company, effective Wednesday.

Eric Benhamou will remain chairman of 3Com's board, company spokesman Kevin Flanagan said.

Mao, 64, who became 3Com's executive vice president for corporate development in August 2006, left seven months later, though he retained a spot on 3Com's board.

"It was a decision by the board of directors to make a change in the senior executive area, and essentially they decided to replace Edgar Masri with Bob Mao as our CEO, with Ronald Sege as our president and COO," Flanagan said.

Mao, who has worked in China for Nortel Networks, will oversee 4,000 employees in China, a growing market for 3Com's switches, routers and other gear to help data networks run efficiently.

"We've got the majority of our employees in China, and a very large piece of our revenue," Flanagan said.

Sege, 51, most recently president and CEO of Tropos Networks Inc., a wireless broadband network provider, will focus on 3Com's operations outside China. He'll work from company headquarters in the Boston suburb of Marlborough, home to about 400 of the company's global work force of about 6,000.

The management changes were announced after trading closed, with shares of 3Com up 4 cents at $2.34.

Masri, who was president and CEO from August 2006 until Tuesday, announced a proposal in September for Boston-based private equity firm Bain Capital Partners to lead a buyout of 3Com. He said the deal would help 3Com gain freedom from the whims of the market and improve its chances of expanding in China.

The deal would have given Huawei Technologies, China's largest manufacturer of telecommunication equipment, a minority stake in 3Com - a prospect that raised the ire of U.S. lawmakers afraid that sensitive military technology would be transferred to China.

3Com's stock rose 34 percent the day the deal was announced but declined after the concerns arose, and Bain and 3Com failed to agree on ways to restructure the deal to address lawmakers' fears.

Bain cited the national security issues in announcing last month that it was giving up on the deal.

3Com's Flanagan said Masri's ouster had "absolutely nothing to do with" the failed buyout.

3Com, facing competition from Cisco Systems Inc. and others, is a shadow of the high-flyer it became during the tech boom. In 2000, its shares briefly rose above $100.

Co-founder Robert Metcalfe helped invent ethernet in the 1970s to link computers, a business that boosted 3Com throughout the 1980s and 1990s, when it made a series of acquisitions. Among them was the 1997 purchase of dial-up modem maker U.S. Robotics, which also included Palm Inc., the personal digital assistant maker.

From 1995 to 2001, San Francisco's football stadium was renamed 3Com Park.

3Com spun off U.S. Robotics in 2000, and 3Com's core networking business fell off after the dot.com bubble burst in 2001. The company left its Silicon Valley headquarters in Santa Clara, Calif. for Marlborough in 2003, and its stock has languished around the $5 mark in recent years.

(This version CORRECTS in lede that China is biggest market, not Beijing.)

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