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To: Glenn D. Rudolph who wrote (48513)	6/10/1998 4:34:00 PM
From: Moonray	Read Replies (1) \| Respond to of 61433

Networking industry's growth seen in sharp slowdown Reuters - 04:10 p.m Jun 10, 1998 Eastern PALO ALTO, Calif, June 10 (Reuters) - The computer networking industry -- for years the fastest-growing high-tech business -- will expand at its slowest rate ever in 1998 as prices for key types of equipment collapse, a market research firm said on Wednesday. Based on lackluster first-quarter results from such networking companies as 3Com Corp. and Bay Networks Inc., Cahners In-Stat Group now expects industry sales to rise just 8.1 percent for the year to $29.1 billion from $26.9 billion in 1997. In the previous two years, the industry's revenues grew by about 30 to 40 percent. The personal computer industry has already experienced what is now happening in the networking business. As more competitors enter, prices for various devices fall sharply, cutting overall revenue growth. The main culprit for the networking industry's slowdown this year is free-falling prices for Ethernet switches -- specialized computers that route information between hundreds of personal computers within a company. Although demand for these devices is at a record, plunging prices will keep sales growth in check, In-Stat said. Ethernet gear is the industry's biggest segment, accounting for 21 percent of the total. Sales of several other types of equipment -- namely network interface cards, hubs, frame relay switches and access servers -- will shrink as they are replaced by newer technology. Other segments continue to show strong growth. In-Stat said sales of routers -- devices used to shuttle information between departmental or corporate networks -- will increase 11 percent in 1998 to $5.4 billion. Cisco Systems Inc., the biggest networking vendor, dominates the router market. In-Stat said sales of beefier routers designed for telephone companies would rise significantly this year as telecommunication companies rush to bolster their Internet services for customers. In addition, telephone companies will spend significant amounts of capital to install Internet-based networks to carry voice calls, which should lead to higher sales for companies such as Cisco, Lucent Technologies Inc. and Northern Telecom. o~~~ O