U.S. network equipment maker 3Com Corp  reported stronger-than-expected fiscal first-quarter results on sales in China and forecast even better sales in the current quarter, sending the shares up 12 percent in after-hours trade on Monday.

"Our strong revenue performance in the quarter was largely due to continued growth in our China segment," 3Com Chief Executive Bob Mao told analysts on a conference call, adding that a stronger yuan currency also bolstered sales.

The company forecast revenue to grow sequentially in the second quarter despite a weaker U.S. economy, saying its cheaper network equipment offered more value to customers.

3Com said profit excluding special items for the quarter that ended August 29 rose to 11 cents a share from 3 cents in the same quarter a year earlier, exceeding analysts' average estimate of 7 cents, according to Reuters Estimates.

Its quarterly net profit was $79.8 million, or 20 cents a share, compared with a net loss of $18.7 million, or 5 cents a share, in the year-ago quarter.

Revenue rose 7 percent to $342.7 million. That exceeded 3Com's own forecast, which was raised to a range of $335 million to $340 million in August amid strong sales through Huawei Technologies Co HWT.UL, China's largest mobile phone equipment maker.

It forecast revenue to rise to around $345 million to $350 million in the current quarter. Analysts on average expected revenue of around $321 million according to Reuters Estimates.

3Com shares rose to $2.34 in after-hours trade after closing at $2.09.

China accounts for about half of 3Com's business thanks in part to the Huawei partnership. In the first quarter, 3Com won business from the Bank of China, which is using its high-end core routers and switches in their data center.

But it has said it expects sales to Huawei -- as a percentage of total sales and in absolute dollars -- to decline in the long term, and that it hopes for more growth in other markets.

The company said it continues to focus on replicating its success in China in other markets, and said that despite the recent slowdown in the global economy, it believed it could keep growing.

"In today's tight economy, we are seeing clear signs of a fly to value, as customers look to get more for their networking dollars," he said, adding that the company was also on target with its cost-cutting plans.

The company said it was now considering the use of its excess cash, including share repurchases, loan repayments, as well as strategic investments.

Source:Reuters