Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : MRV Communications (MRVC) opinions? -- Ignore unavailable to you. Want to Upgrade?

To: signist who wrote (7506)	3/2/1998 11:03:00 PM
From: signist	Respond to of 42804

cabletron warning Cabletron Systems issues Q4 earnings warning Reuters Story - March 02, 1998 16:29 %DPR %SP500 %US CS %RES %RESF CSCO BAY V%REUTER P%RTR ROCHESTER, N.H., March 2 (Reuters) - Cabletron Systems Inc, feeling the bottom line pressure from the closing of its digital network products business, said late Monday that it expects earnings per share to either break-even or incur a loss, before accounting for non-recurring charges. The computer networking products maker is taking a series of non-recurring, pre-tax charges in the fourth quarter of more than $390 million due to the closing of the business. Current First Call earnings estimates, compiled from 23 brokers, forecast fourth quarter earnings per share of $0.16 and $1.03 for fiscal 1998. Cabletron said it expects to report revenues in a range between $305 million and $320 million, compared with sales in the fourth quarter of fiscal 1997 of $380.6 million. "A shortfall in sales, operating expenses related to the closing and integration of the digital network business early in the quarter and the adverse margin impact of lower volume, pricing and some materials related charges," also contributed to the lower than expected fourth quarter earnings, the company said. The company said in a statement the biggest charge is $335 million for in process research and development costs related to the closing of the digital products business. After tax, the charge is $1.28 a share or $203.6 million. Cabletron expects to take a second $55 million pre-tax charge for transaction related expenses, also incurred due to the closing of the digital products business. The after-tax costs of the transaction related expenses is expected to be $0.21 a share or $33.4 million. A third charge of roughly $30 million, pre-tax, which had previously been anticipated in mid-December, is being taken for a realignment of its business, which included the cutting of 600 jobs. The after-tax effect of this charge is $0.12 a share, or $18.2 million. "Because of the late closure of the digital deal and weakness in the U.S. businesses, this number was slightly worse than was expected," said Salomon Smith Barney Analyst, Peter Swartz. "They are not just picking niche markets, but playing in every market and there is price erosion." Towards the end of the quarter, when Cabletron usually realizes a large portion of its orders, it experienced a shortfall in certain domestic product segments and continued weakness in federal government sales. "Despite the strength of the activities of the quarter, including the closing of our digital acquisition and the announcement of the definitive agreement to acquire Yago Systems, there were some pitfalls in our domestic sales, which we are aggressively addressing," Don Reed, Cabletron's president and chief executive officer said in a statement. In after hours composite trading, Cabletron's stock fell 2-1/4 to 13-1/4 a share. That is 3/4 of a point below its closing price on the New York Stock Exchange. Rivals Cisco Systems Inc closed the day down 5/8 at 65-1/4 on the Nasdaq composite index, while Bay Networks Inc fell 2-1/8 to close at 31-3/4 on the NYSE.