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

To: Alex who wrote (5779)	3/22/1999 8:18:00 PM
From: dav	Read Replies (1) \| Respond to of 8358

Cabletron reports profit, cuts jobs By Bloomberg News Special to CNET News.com March 22, 1999, 4:00 p.m. PT update Cabletron Systems, the No. 4 computer-networking company, earned an unexpected profit for the fiscal fourth quarter as it sold more new equipment while sales of its older products fell. The company had profit before a charge of $2.5 million, or 1 cent a share, for the period ended February 28, compared with a loss before charges of $6.3 million, or 4 cents, a year earlier. Cabletron was expected to lose 1 cent a share, the average estimate of analysts polled by First Call. Cabletron has lost corporate customers to top networking company Cisco Systems, rival 3Com, and others that beat Cabletron to market with key products. The company is starting to sell newer gear to phone and telecommunications companies, though it faces challenges in that fast-growing market from rivals like Lucent Technologies and Northern Telecom. "They're behind a lot of companies that have more technology and presence in the service provider market," said Scott Heritage, an analyst with Warburg Dillon Read who rates Cabletron "hold." Do you want to know more? Read related news View story in The Big Picture Go to Message Boards Search News.com Sales rose 11 percent to $345.1 million from $311.5 million. During a conference call with analysts, Cabletron executives said the company will now focus on the enterprise and service provider markets, specializing in hardware, network management, and professional services. "We unfortunately had to outsource our manufacturing," said Cabletron chief executive Craig Benson. "It's a huge change for us, but the new concept is much more focused in the areas we can add value. We will be the leaders in the marketplace." QUOTE SNAPSHOT March 22, 1999, 1:08 p.m. PT Cabletron Systems CS 10.0625 +0.3125 +3.21% by symbol by name > more from CNET Investor Quotes delayed 20+ minutes Heritage said Cabletron's new focus looks good on paper, but the company has yet to produce good results. "Outsourcing the manufacturing is a good idea and going after the new markets, that's great," he said. "But this company has lost the confidence of a lot of investors. They can talk all they want, but they have to perform. The bottom line is: can they grow revenue and sustain some growth?" Cabletron executives said the company plans announce new products for its SmartSwitch Router, virtual private network and cable modem technologies in the coming months. They also hinted that Cabletron will sign a more lucrative sales contract with Compaq Computer within the next few weeks. Previously, the PC maker had taken an existing contract with Cabletron as part of its purchase of Digital. Separately, Cabletron said it plans to close its Ironton, Ohio, plant and fire 300 workers there after it contracted with Celestical of Toronto to manufacture its equipment. The agreement calls for Celestical to acquire some of Cabletron's manufacturing assets. The company also expects to have less than 5,000 workers by the end of the year, Benson said. It had 5,951 employees at the end of its fiscal fourth quarter. Cabletron, based in Rochester, New Hampshire, rose 0.3125 to 10.0625 in trading of 2.95 million. The company reported results after the close of regular U.S. trading. News.com's Wylie Wong contributed to this report. Copyright 1999, Bloomberg L.P. All Rights Reserved.