Cabletron reports 19pc jump in earnings

Cabletron Systems this week reported earnings of $US12.5 million, or $0.07 per diluted share, on sales of $356.6 million for the second quarter of its fiscal year 2000, ended August 31.

Pro forma net income and earnings per share were up 19 per cent and 17 per cent, respectively, from the second quarter of fiscal year 1999 ended August 31, 1998. Sales, however, were down from the $370.6 million recorded for the second quarter of fiscal year 1999.

On a sequential basis, though, net income and earnings per share for the second quarter 2000 were up 72 per cent and 75 per cent, respectively, over the first quarter 2000. Net income and earnings per share for that period were $7.3 million and $0.04 per diluted share, respectively, on sales of $349.5 million.

"This is a fundamentally different company today to what it was six months ago," said Piyush Patel, Cabletron chairman and CEO. "Fuelled by product successes such as the SmartSwitch Router, which grew over 200 per cent year-over-year, Cabletron is reasserting our position as the industry's technology leader. We have a clear strategy and direction, we are focused on execution, and we now have clear visibility into our business fundamentals."

During the quarter, Cabletron says it made gains in the service provider market, where it is targeting internet service providers, cable companies and competitive local exchange carriers providing Web hosting and collocation services. Cabletron is developing systems for the edge of the internet, where enterprises need to hand-off data to their ISPs or leased line connections.

In the enterprise market, Cabletron says Dell'Oro Group lists the company as the leader in Layer 3 port shipments for the second calendar quarter of 1999. Cabletron also maintains a number two position in modular Layer 2 switches, the company says, again citing Dell'Oro statistics.

Cabletron claims its services business would rank in the top 10 in terms of service and technology providers if it were a stand-alone company. According to Dataquest, the services market will grow on a global basis from $70 billion in 1997 to $148 billion in 2002, with a compound annual growth rate of 16.2 per cent.

Cabletron anticipates its services business will grow at or above industry annual growth rates.

"I am confident that as long as we continue to execute decisively and with speed, we will be able to return the company to the level of growth and profitability our shareholders, customers and employees expect from Cabletron," Patel said.

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