Here's the article, NW, where people over at Yahoo! picked-up on the rumor. Compaq is one of the "potential suitors" mentioned in the article.
Note the URL I cite is different than the one originally posted here:
messages.yahoo.com@m2.yahoo.com
Dec 14, 1998 (Tech Web - CMP via COMTEX) -- Poor pending financial
results have renewed
calls among Cabletron's detractors that the company be sold.
The Rochester, N.H.-based company is expected to announce next week a
third quarter operating
loss of 10 cents per share, or approximately $17 million, well below the
11-cents-per-share profit
analysts expected. The company also announced it expects to miss by $60
million the forecasted
$390 million in revenue.
Some IT managers were surprised by the numbers and said Cabletron's
service and development
efforts, particularly those behind its new SmartSwitch Router, remain strong.
"As a customer, I haven't lost confidence. It hasn't rattled my Cabletron cage,"
said Bob Begun,
director of network and systems at Nathan & Lewis Securities.
Analysts have pointed to a number of internal problems at the company, and
some have suggested
CEO Craig Benson, a company founder, step down. The problems include
historically weak
marketing efforts and channel sales, a narrow product line, and shrinking
demand for shared media
devices such as hubs.
Cabletron also is playing catch-up in the key switching, carrier equipment, and
cable-modem
markets. "I don't think they will crash and burn, but they easily could if they
don't get acquired or
find a strategic partner," said Craig Johnson, a principal with the PITA Group
International.
Rumors abound about potential suitors, including Alcatel, Compaq, Ericsson,
Lucent, and
Siemens.
"If you're Alcatel or Siemens and you want to get into the enterprise
networking business,
Cabletron is something that is incredibly cheap and can be a smart
acquisition," said Paul Johnson,
a senior technology analyst at BancBoston Robertson Stephens.
Amid the bleak news, the SmartSwitch Router is a bright spot. Market share
for the wirespeed
Layer 3 and Layer 4 device is up to 33 percent from 8 percent a quarter ago,
according to the
Dell'Oro Group, in Portola Valley, Calif. Cabletron, however, faces an uphill
battle in the xDSL
and cable-modem markets.
"They don't have the sales force, the channels, or the connections to get into
xDSL," said PITA's
Johnson. On the cable side, Cabletron announced a cable-modem module for
its SmartSwitch
Router two weeks ago, but it won't ship until next year.
The Nortel/Bay Networks marriage has hurt Cabletron because the company
supplied products
for Nortel's internal network as well as piggybacking into Nortel customer
accounts. Diminished
sales to Nortel alone accounted for nearly half the company's $60 million
revenue shortfall, analysts
said.
The preliminary third quarter numbers have put the spotlight on CEO Benson.
"What Benson is
doing with Yago and NetVantage is a product strategy that is spot-on. He has
much greater
price/performance for all that functionality than anyone else," BancBoston's
Johnson said.
Others said they see it differently. "I blame Benson; he did not see the market
shifting on him and
he should go," Johnson said. Some IT managers said they are not concerned
about who ends up at
the controls.
"No one wants to burn the customers. We will be taken care of," said Kevin
Schmidt, campus
network programmer for the University of California at Santa Barbara.
Cabletron officials did not return calls seeking comment for this story.
Copyright (C) 1998 CMP Media Inc.
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