BOSTON, March 29 (Reuters) - The chairman of Cabletron Systems Inc. said on Thursday he has an "aggressive internal schedule" to spin-off two of the
Internet equipment firm's operating companies by the end of the year.
Rochester, N.H.-based Cabletron, whose holdings include four operating companies, plans to skip the intermediate step of an initial public offering for its
Aprisma and Enterasys units and distribute their shares directly to shareholders, Chairman Piyush Patel told Reuters.
"IPOs are getting more bad publicity than good publicity," Patel told Reuters in an interview.
Cabletron's shares jumped $1.15, or 10.46 percent, to $12.11 in Thursday midday trading on the New York Stock Exchange. The company on Wednesday
raised its revenue outlook for the current quarter to $305 million-$310 million from $300 million-$305 million.
Aprisma and Enterasys both posted operating profits during the fiscal fourth quarter that ended March 3, helping Cabletron beat Wall Street estimates by a
penny. In addition, Patel said, Cabletron reaped a windfall of roughly $500 million from its investment in Efficient Networks Inc. , which is being acquired by
Siemens AG.
In 1999, Cabletron received about 7.3 million shares of Efficient Networks' common stock in an $861 million stock deal for its FlowPoint Corp. subsidiary.
Patel said Cabletron originally bought FlowPoint for about $25 million.
"Siemens paid a handsome price," Patel said.
As a result, Cabletron does not need an IPO to raise funds for Aprisma and Enterasys, Patel said.
Cabletron's Riverstone Networks Inc. unit, however, used the public markets to raise $120 million in an IPO on Feb. 16.
Patel said Cabletron currently holds about $1.1 billion in cash and investments.
The weak link among Cabletron's four operating companies remains GlobalNetwork Technology Services, which posted an operating loss of $18.1 million
during the fiscal year 2000.
Patel said selling the company remains an option. Meanwhile, Cabletron has been cutting the unit's costs to bring them in line with revenue.
"We're not going to ignore the business," Patel said.
Cabletron's fiscal fourth-quarter performance was in contrast with the rough going experienced by Internet equipment heavyweights such as Cisco Systems
Inc. , Lucent Technologies Inc. and Nortel Networks Corp. During the past several months, the shares of Internet equipment makers have received brutal
treatment from investors spooked by a raft of profit warnings and slowing top-line growth.
Cabletron said it reversed a year-ago loss, generating pro forma net income of $10.7 million, or 6 cents a share.
Cabletron is partly insulated from an industry-wide slowdown in telecommunications spending because it does not carry the vendor financing risk hurting its
larger rivals, Patel said. |
