This little episode with 3Com has crystallized the various random thoughts that have been buzzing around my head. MF Templar has done a very good job discussing the situation in his Lunchtime News , Evening News and Fool Portfolio columns for February 10th. . I have always found that a panic in a widely followed growth stock was the clearest display of the Wise herd mentality. Some think of bulls stampeding but I saw elephants running towards the exits.

Since MF Templar started with the military analogies, I'll continue with them. Remember that for every Dien Bien Phu, there has also been a Normandy or Bastogne. 3Com's 1993 plunge is still vivid to me because they had just ceded the LAN OS market to Novell. My former hospital's IS department was trying to push 3Com's software on our department over our choice of Novell. Suddenly IS had to switch to our choice. Giving up on what once was a core business did not hurt 3Com in the long run; they adapted to a changing situation. Its 3-year return to the end of 1996, including the drop in 1993, was 524%. This return was significantly better than the 71% that the S&P 500 advanced (unless you were short). 3Com rallied and won that battle by switching weapons.

So what do you do if you still hold the stock after today's setback? MF Templar said that "Foolish paratroopers charged a well-defended hill today called 3-Com Bluff." My view of portfolio management is a little different. It seems to me that a fierce cross wind called a lower earnings report caught the 3Com paratroopers and blew them all over the map. Some of them landed on target, some are in the swamps and at least one is stuck in the bell tower of Sainte-Mere-Eglise. 3Com has been disrupted, but are they out of the war?

MF Templar has done a good first analysis of the numbers. Now come the hard choices: do you buy, sell or stay put? To make a decision you need to answer several questions to your satisfaction. Is 3Com still a good company? This is slower growth that we are talking about, not a decrease in earnings What are the chances that this quarter is an aberration? If 3Com still has sound fundamentals, why not buy more while it is on sale for 50% of its high? Or perhaps Intel has the advantage and this is a fair price. Maybe Iomega is better deal, it was only off 3/8s. A significant portion of your decision will depend on whether you think that Eric Benhamou is a McAuliffe or a de Castries. Will he be able to regroup and fight back or will he allow his opponents to whittle away his positions until 3Com has nothing left?

Now, for those of you who expect me to tell you what to do, I am going to pull the rug out from under your feet. I don't own any 3Com stock and won't say if I am going to buy any, much less tell you what to do. But I have been in this situation before and I will tell one thing. The decision is yours, my foolish friends, and the best thing for you to do is to keep it yours. I don't presume to know your investment time frame, tolerance for risk, level of margin or capacity to put up with historical allusions. You get to figure out the next move; I am only going to ask you to think before you act. It is better this way; Wise people listening to other Wise people got 3Com into the situation that it finds itself now.

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