Cabletron seeks return to 30-40 pct sales growth
BOSTON, Sept 13 (Reuters) - Cabletron Systems (NYSE:CS - news), which has seen stagnant sales as it has lost ground to rivals in the computer-networking business, expects to return to 30 percent to 40 percent revenue growth rates within 18 months, the company's chairman and chief executive said on Monday.
Piyush Patel, promoted to the top jobs at Rochester, N.H.-based Cabletron in June, said during a technology conference sponsored by SG Cowen that he also expects the company's gross margins will soon show improvement.
``The gross margins will, I think ... start improving from this quarter onward,' Patel said.
Cabletron, which is slated to report earnings next week, posted a loss, including all charges, of $22.5 million, or 13 cents a share, in its quarter ended May 31. The company also saw revenue slip during that quarter to $349.5 million from $365.7 million in the year earlier quarter, better than analysts' expectations.
Patel said the company is making progress on outsourcing its manufacturing operations, with 50-60 percent of the company's manufacturing now done by contractors. That figure is likely to climb to 80-90 percent in the next few quarters, Patel said.
Cabletron is the number-four computer networking firm, behind giants Cisco Systems (Nasdaq:CSCO - news), 3Com Corp (Nasdaq:COMS - news) and Nortel Networks (Toronto:NT.TO - news).
Patel said Cabletron is still considering a spin-off or public offering of its Spectrum network management unit, which now operates as a stand-alone entity within Cabletron.
Cabletron shares, which traded as high as $45 more than two years ago closed on Monday at a 52-week high of $18 5/16.
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