3Com (COMS) shares are taking a hit this morning after the company provided a forecast for its fiscal first quarter ending in August which disappointed the Street.

For its fiscal fourth quarter ended May 29, the company posted revenue of $295.1 million and non-GAAP profits of 10 cents a share.

But the focus for holders of the networking equipment company is on the outlook. On a conference call with the Street this morning, the company sees revenue of $270 million to $280 million, with China-based sales down 5% sequentially. The Street had been expecting $301 million. Sales to Huawei are expected to drop to a range of $25 million to $30 million, from $45 million in Q4. The company expect flat results in the rest of its business.

Gross margin in the quarter are expected to drop below the Q4 level due to lower revenues and the fact that Q4 margins were aided by a one-time $5 million favorable adjustment. Non-GAAP EPS is expected to be 3-5 cents a share, below the Street consensus of 7 cents.

3Com said it expects a lower cash balance due to a $50 million payment in China for long-term incentive employee payments.

For FY 2010, the company sees Huawei sales dropping to a range of $50 million to $100 million from $229 million in FY 2009. 3Com said it will be “extremely difficult to fully offset” that drop, “particularly given the current economic conditions and the uncertain timing of the economic recovery.”