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Strategies & Market Trends : The Thread Formerly Known as No Rest For The Wicked -- Ignore unavailable to you. Want to Upgrade?

To: Stuart T who wrote (60717)	9/17/1999 3:06:00 PM
From: Stuart T	Read Replies (2) \| Respond to of 90042

DJ Cabletron, 3Com Seen Posting Flat Profits For Quarter By Peter Loftus NEW YORK (Dow Jones)--3Com Corp.'s (COMS) earnings for the quarter ended Aug. 31 are expected to be flat compared with a year ago. Meanwhile, its data networking rival Cabletron Systems Inc. (CS) should also report quarterly earnings flat with, or slightly below, last year's figure. Analysts expect revenue for both companies to fall from a year ago as they face increasing competition from their larger and more successful rival Cisco Systems Inc. (CSCO). Cabletron, Rochester, N.H., is set to report its second-quarter earnings Monday after the market closes; 3Com, Santa Clara, Calif., will release its first-quarter results late Tuesday. Cisco reported results for its fourth quarter in August, including earnings of $635 million or 21 cents per share, beating analysts' estimates. As two of the few remaining stand-alone data networking firms, 3Com and Cabletron have struggled to hang on to market share in their respective niches of the industry, analysts said. The companies also experienced a seasonal slowdown in the summer months. * * * Cabletron is still in turnaround mode as it emerges from a management change in June and a restructuring announced in December 1997, which was prompted by a loss of market share to 3Com and Cisco. Weinstein, the Credit Suisse First Boston analyst, expects Cabletron to report earnings of 6 cents a share on revenue of $355 million for its second quarter ended Aug. 31, down from earnings of 7 cents a share on revenue of $370.6 million a year ago, excluding items in both periods. Weinstein's earnings estimate for the latest quarter matches the First Call consensus. "Cabletron's switching business came on pretty strong this quarter, so I expect them to be able to beat" his earnings estimate, Weinstein said. He also thinks sales of the company's DSL platforms were strong. But Weinstein said Cabletron is still losing market share to Cisco, and he is concerned that it hasn't been as acquisitive as other networking firms. Cisco, for example, announced earlier this month it would buy optical networking firms Cerent Corp. and Monterey Networks Inc. for a combined $7.4 billion in stock. At the start of the quarter, some analysts downgraded Cabletron stock on expectations of lower revenue in the second quarter. Cabletron said in June that its first-quarter results included $20 million in revenue from sales of products to Compaq Computer Corp. (CPQ), but analysts had expected that revenue to be included in the second quarter. Andy Schopick, an analyst with Nutmeg Securities, thinks Cabletron's strength is its local-area-network switching product. Its revenue in this area rose about 30% between November 1998 and last May, and Shopick expects continued growth. The company has gained some market share and improved marketing in LAN switching, but it still faces tough competition from Cisco and Extreme Networks Inc. (EXTR), he said. Cabletron shares recently traded at 19 3/8, up 1 3/8 or 7.6%, on volume of 2 million, compared with the daily average of 2.3 million. 3Com shares were off 1/16 or 0.2%, at 27 5/8, on volume of 4.2 million, compared with the daily average of 5.4 million.