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Technology Stocks : Cabletron Systems (CS: NYSE) -- Ignore unavailable to you. Want to Upgrade?

To: blankmind who wrote (2833)	1/16/1998 2:12:00 PM
From: polarisnh	Read Replies (2) \| Respond to of 8358

IDCFLASH Cabletron Delivers on its Multilayer Switching Promise and Acquires Yago Systems Analyst: Esmeralda Silva IDC Opinion Cabletron with this latest acquisition of Yago Systems has become an active participant in the delivery of next-generation multilayer switch networks for both enterprise and service provider customers. "Route-switches" deliver wire-speed functionality, with the added benefit of more value-added services at one-tenth the cost of traditional router solutions. These next-generation switches offer customers wire-speed performance and full-functional routing (without having to compromise one for the other) and deliver both at Gigabit speeds. The Yago chassis has the capacity and scaleablity to handle both enterprise and ISP backbone traffic. This was a critical acquisition for Cabletron and finally provides the company with a solution to compete head-on with Cisco and others for enterprise cores as well make a play for the service provider market. Announcement Highlights On January 14th, 1998 Cabletron announced that it will acquire Yago Systems for 6.1 million shares of stock in exchange for all of the capital stock of Yago not currently owned by Cabletron. Cabletron currently holds approximately 25 percent of Yago's capital stock, calculated on a fully diluted basis. Cabletron has agreed to issue up to an additional 5.5 million shares of Cabletron stock to the former shareholders of Yago in the event the shares originally issued in the transaction do not attain a market value of $35 per share 18 months after the closing of the acquisition. The total market value of the transaction is expected to be $213 million. IDC Analysis Today's current software based routers are coming under intense pressure as the appetite for more bandwidth and better connectivity continues to be fueled by Internet growth, the deployment of intranets, and growing application requirements. Current router solutions lack the Gigabit and low latency performance needed to address these new requirements, and of course scaleability is of paramount concern. Route-switches offer wire-speed Gigabit performance as well as control without compromise. Combine this with scaleability assurances and you have a solution that challenges the fundamental way network managers can view and design their networks. Cabletron's current "cut-through" switching is based on its SecureFast strategy which uses ARP (Address Resolution Protocol) procedures and messages in a communications protocol to determine which MAC address corresponds to the IP address in the packet. Further development and the need to take SecureFast to the next level to offer high-performance wire-speed standards based routing and VLANs has been eliminated with the Yago acquisition. The parts of SecureFast that will likely be integrated into the Yago solution are the accounting and directory services. Customers should expect to pay a premium for the Yago solution over current SecureFast cut-through switches. However, there will be a place for both since cut-through switches will likely continue to be used in wiring closet installations, and the new Yago chassis will be targeted at enterprise cores as well as ISP backbone networks. Cabletron finally has a solution it can sell outside private enterprises. To date, only Spectrum, Cabletron's management system, has succeeded in penetrating service provider networks. The recent acquisition of Digital's Networking Products division and the addition of Digital as its systems partner provides the channel. Yago delivers the gigabit route switch and WAN switching that is required to sell to these customers. We believe the addition of Yago will position Cabletron as a player in this lucrative market. Why the Need for Wire-Speed Gigabit Routing? In the past, traditional routers did not come under pressure as backbone devices because they were designed to segment and interconnect devices that supported networks where the majority of traffic was within a workgroup or local. With the surge in intranet, internet, and extranet growth, past traffic pattern norms, where 80% of traffic remained local and 20% went to other networks, get thrown out the window. Further, centralization of server and intranet resources has made it necessary to increase the performance of traditional routers. Technologies like Gigabit ethernet will need to be deployed as 100Mbps switches become the technology of choice within wiring closets. The first application for Gigabit ethernet will come from the need to connect these 100 Mbps switches, much in the same way the need to connect 10Mbps switches drove growth of fast ethernet as a backbone technology, a year ago. Yago Goes beyond Gigabit Routing Yago not only provides a Gigabit switch router to Cabletron, but also delivers value beyond this by supporting higher-layer functionality and QOS (Quality of Service). As switches make more sophisticated decisions they deal with more information from higher layers. These decisions are often called Layer 4 filtering and forwarding (or routing). As users demand faster switches to accelerate Layer 2 traffic they will also require more control over services. This leads to the need to read IP headers at the higher OSI layers, forcing vendors to create smarter switches. How relevant is Layer 4 switching? The argument that is used by vendors offering Layer 4 capabilities is that looking at higher levels of the OSI model enables that switch to perform at wire speed. The ability to switch packets at wire-speed based on Layer 3 and 4 information allows customers to allocate QOS. It also allows them to control access and monitor statistics of individual IP and IPX applications per user at wire speed. QOS is another term that is often thrown around, and just as often misused. At its most basic level, QOS means that the network is able to deliver information when and where it is needed. In the past, most of the traffic was data and most of it remained local. Today, real-time and multimedia traffic is crossing network backbones, and QOS is being looked at as a crucial part of the equation. Most high-end switches offer QOS features whether this is through shared memory buffering, multiple priority queues with weighted fair queuing, or hardware-based filtering and forwarding. These types of functions allow customers to set bandwidth priorities and control latency for high priority traffic. Priority tagging (802.1p & 802.1Q) and RSVP, have been developed to address these concerns. Advanced management tools, often called "policy-based" tools, allow the network manager to optimize traffic flows based on simple rules. The Yago Stats Yago provides Cabletron with a high-performance, scaleable route-switch that offers standards-based routing and standards-based VLANs. Following are the statistics: Performance - Up to 30 Mpps routing throughout - Up to 32 GBps non-blocking switching fabric Functionality - Wire-speed native Layer-4 switching of IP and IPX - Wire-speed Port and Protocol Layer 2 VLANs - Wire-speed application level QOS-policy based/RSVP - Wire-speed security filters - Full RMON/RMON2 support on every port - Java-based network management Capacity - Up to 120 ports of 10/100 Base-TX or 30 1000 Base-LX/SX - Up to 4 million Layer 4 application flows - Up to 250K routes - Up to 20K security filters Application Level Quality of Service - Strict Priority & Weighted Fair Queuing Security - Layer 2 and Layer 3/Layer 4 Access control lists - RADIUS authentication for device access control (future) - LDAP with integrated X.509 Digital Cetificates (future) Network Management - Supports SNMP protocol and standard MIBs - Full RMON/RMON2 on every port - -Zero-client- Java based GUI - Cisco like Command line Interface over Telnet Policy Management - Multiple system configuration through Java GUI - LDAP centralized policy services (future) Capacity - Up to 2 million L3/L4 flows - 400K MAC addresses - 20K ACLs - 4K VLANs - 10K L2 Filters The MSR 8000 will be released during 1Q 1998. This is an 8 slot box capable of aggregate performance of 15 Mpps running all 9 groups of RMON as well socket enabled Layer 4 switching. During 2Q 1997, a 16 slot chassis capable of aggregating 30Mpps will be available and provide 120 ports of 10/100 and 30 Gigabit ethernet ports, as well as serial and HSSI WAN modules. The MSR 32000 is scheduled to be released during 2nd Half 1998 and will offer 60 Mpps, support for OC-3c and OC-12c ATM, as well as OC-3c, OC-12c, OC-48c Packet over SONET modules. Conclusions The acquisition of Yago Systems provides Cabletron with the solution it has never had to compete head-on with Cisco for the enterprise core and also gives the company the ability to penetrate service provider networks with a product other than its Spectrum management platform. Cabletron is now ready to finish executing and delivering on its multilayer switching strategy. The channel and service network is in place as a result of the Digital acquisition; and the products are being delivered through Yago. What is left? Some fine tuning and a clarification of its strategy to a waiting installed base as well as potential new customers.