Thread: Evidence that BAY has hurt Cabletron:
__________
Donald Reed Resigns as President,
CEO of Toiling Cabletron Systems
By ROSS KERBER
Staff Reporter of THE WALL STREET JOURNAL
Donald B. Reed resigned his posts as president and chief executive officer of Cabletron Systems Inc., only eight months after being hired to turn around the struggling computer-networking manufacturer.
Mr. Reed will be succeeded in both posts by Cabletron's 43-year-old chairman and cofounder Craig R. Benson, who owns a 13% stake in the Rochester, N.H., company.
According to Mr. Benson, Mr. Reed, who is 53, "realized that my vast industry experience and my executive ability allowed me to execute the strategy much more effectively." Mr. Reed will become a consultant to the company and remains a member of its board of directors.
The move highlights the continuing pressure on Cabletron as its corporate customer base moves rapidly to high-speed switched systems that depend on new types of components. Last week Cabletron announced its first loss ever of $6.3 million before a charge of four cents a share, on revenue of $311.5 million, for its fiscal fourth quarter ended Feb. 28. For the same period a year ago Cabletron earned $72.6 million before charges, or 45 cents a share, on revenue of $380.5 million.
Analysts expect Cabletron to earn about six cents a share in the current quarter. Mr. Benson said in a conference call with reporters and analysts Monday that "it looks like a fair amount of work needs to be done on my part to make those numbers."
The past year has been a time of "tough transition," Mr. Benson said Monday, due to competition from rivals that make these high-speed systems such as Cisco Systems Inc. and Bay Networks Inc. To compete, Mr. Reed helped engineer the $90 million purchase of the majority of closely held Yago Systems Inc. that Cabletron completed in January, in a transaction that gave Cabletron access to that company's high-speed networking products.
Also, last November Cabletron announced it would buy Digital Equipment Corp.'s networking business in an agreement valued at roughly $430 million, providing Cabletron with access to Digital's extensive distribution and reseller network.
But Cabletron must still prove it can take advantage of the strategic agreements. As part of Monday's management shake-up, the company promoted executive vice president John d'Auguste to president of operations, where he will oversee engineering and sales efforts. Also, chief financial officer David J. Kirkpatrick was named executive vice president and will oversee most of the company's manufacturing operations, Mr. Benson said.
Together, the moves are meant to bolster Cabletron's operational abilities, Mr. Benson said. Mr. Reed's appointment last August came as a surprise to many observers because his career as a manager with Nynex Corp.'s regulatory and public-affairs divisions had left him with little technology experience.
Shares in Cabletron fell 37.5 cents to close at $14.875 in New York Stock Exchange composite trading Monday. Cabletron announced the changes after the close of trading.
_______
Victor |
