July 9 (Bloomberg) -- 3Com Corp., the networking-equipment maker, fell the most in four months in Nasdaq trading after projecting first-quarter profit that trailed analysts’ estimates.

Profit will amount to 3 cents to 5 cents a share, Chief Financial Officer Jay Zager said on a conference call today. That compared with the 7-cent average of three estimates compiled by Bloomberg. Sales may drop as low as $270 million.

Revenue is falling because 3Com’s biggest customer, Huawei Technologies Co., plans to sell its own equipment to China’s phone carriers, Zager said in an interview. Huawei had signed an agreement not to compete against 3Com after 3Com bought out Huawei’s half of a joint venture. That agreement expired in 2008, Zager said.

“When the non-compete clause expired, the question was always when they would produce their own products,” Zager said. “It didn’t happen in 2009, when we anticipated it would. We expect two years’ of reduction coming in the next two or three quarters.”

Huawei accounted for $230 million, or 17 percent, of revenue for the year ended May 29, Zager said. Sales to Huawei will fall to $50 million to $100 million this year, he said.

3Com fell 40 cents, or 8.5 percent, to $4.30 at 4 p.m. New York time in Nasdaq Stock Market trading, the most since March 5. They have gained 89 percent this year.

Slowing Spending

Last quarter, sales fell 8.2 percent to $295.1 million, Marlborough, Massachusetts-based 3Com said today in a statement. Profit, excluding stock-based compensation and other costs, was 10 cents a share, compared with the 5-cent average estimate of three analysts surveyed by Bloomberg.

Net income amounted to $20.2 million, or 5 cents a share, compared with a year-ago loss of $166.7 million, or 41 cents, when 3Com wrote down the value of its 2005 TippingPoint acquisition. The business sells security systems that protect computer networks and detect intrusions.

Some customers have curbed spending on technology to cope with the steepest global recession since World War II. The company has looked to business in China for growth, particularly in the banking, telecommunications and video-surveillance industries, Chief Executive Officer Robert Mao said on the call.

(For a replay of 3Com’s conference call, click on http://www.3com.com/investor.)

To contact the reporter on this story: Nikolaj Gammeltoft in New York at ngammeltoft@bloomberg.net

Last Updated: July 9, 2009 16:05 EDT