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Technology Stocks : Plaintree (TSE:LAN,NASDAQ:LANPF) -- Ignore unavailable to you. Want to Upgrade?

To: Ron logo who wrote (1436)	2/8/1999 9:12:00 AM
From: Link Lady	Read Replies (1) \| Respond to of 1606

What do the long term followers make of this? nationalpost.com Plaintree Systems boss finds himself in a fight at the finish As shares plummet and staff quit, CEO Colin Beaumont has his hands full Karyn Standen Ottawa Citizen If there was ever a time Colin Beaumont felt like giving up, that time is certainly now. On Friday, Plaintree Systems Inc. -- the company Mr. Beaumont runs -- received yet another in a seemingly endless series of setbacks, when chief financial officer Thomas Branca tendered his resignation. The fact Mr. Beaumont has so far resisted the impulse to quit is a key reason Plaintree remains alive -- albeit barely. Mr. Beaumont joined Plaintree as a director in 1996, soon after retiring as chief engineer at Northern Telecom Ltd. Two years later he replaced Bruce Walter as chief executive of the struggling Stittsville, Ont., computer switch company. It was not, by any stretch of the imagination, a dream job. Plaintree had fallen behind on a number of important product development schedules, and Mr. Walter wanted to step aside in favour of someone who knew "what it takes to build high technology products." Plaintree, which makes Ethernet switches for computer networks, had failed to record a single annual profit since its founding in 1988, (a trend that continues) and was on track to its 13th consecutive quarterly loss. The company was suffering from a number of missed market opportunities, stiff competition and delays in product development schedules. Plaintree, Mr. Beaumont recalled in a September interview, was in "a really bad position." The hardship took its toll on the beleaguered firm. Turnover of staff was significant as employee morale eroded. The company's share price sank from a high of $22 in May 1995 to about $2 in May 1998. Nevertheless, Mr. Beaumont agreed to head Plaintree, primarily because he saw a market opportunity in selling switches to Internet service providers (ISPs) and telephone carriers flooded with data traffic. This is where Mr Beaumont's experience at Nortel became critical. Key to making the new opportunity work would be a deal with Nortel in which the two companies would jointly build high-speed data switches, called gigabit Ethernet devices, for ISPs. Plaintree, which had long suffered from a lack of marketing muscle compared to giant rivals such as Cisco Systems Corp. and 3Com Corp., also hoped to use Nortel's vast sales and marketing channels to level the playing field. Mr. Beaumont contacted John Roth, Nortel's CEO, who agreed with the partnership proposal. The announcement last June that Nortel would invest $9-million in Plaintree, in return for a 19% equity stake, catapulted Plaintree's shares up 58%. However, just weeks after the deal was signed, Nortel bought California-based Bay Networks Inc. Plaintree found itself pushed aside in favour of a much larger networking company that offered Nortel a broader product line. "We failed [to make the Nortel partnership work], which is a reason why we're in dire straits at the present," Mr. Beaumont said. The bleeding continued at Plaintree. In October, the company posted a loss of $4.7-million on sales of $3.5-million in its second quarter. It was the 14th consecutive losing quarter. In mid-January, seven months after Nortel's acquisition of Bay effectively ended Nortel's alliance with Plaintree, Mr. Beaumont issued two terse statements saying Plaintree was laying off one-third of its staff of about 150, and that "continuation of the existing business may not be viable" unless the company raised $5-million to $8-million within 30 days. Plaintree's shares plunged 64% to close at 43¢. For Mr. Beaumont, heading a company that rates little interest from analysts and is fighting for its life, is a very long way from his successes as a senior Nortel executive -- especially his role in helping to launch Nortel's booming computer security spinoff, Entrust Technologies Ltd. Yet if he ever wondered how he got to where he is, considering where he came from, he is keeping those thoughts to himself. "We've run out of road, and I'm disappointed," he said, alluding to Plaintree's dire financial situation that has left it with only $3-million in the bank. "I haven't succeeded in closing the key deals that would make Plaintree successful." Mr. Beaumont describes the past few months spent trying to put Plaintree back on track as the most difficult period in his career. He's focusing on finding new partners and sources of financing. He adds he is not ruling out "absorption by much larger companies . . . at the right moment in time." He is also devoting much of his time to transforming Plaintree into a smaller firm with a more streamlined product line, which includes the release of a new generation of fast, inexpensive Ethernet local area networking switches that extend its current WaveSwitch product offering. He projects first-year revenues "in excess of $20-million" for the switch, which is expected to be released to select customers in March. According to industry research, the market for local area network switches is worth $8.5-billion, and is growing at a healthy 35% to 50% a year.