A Cabletron Systems executive confirmed recently that the company is considering spinning off parts of its business to strengthen its position in the highly competitive computer networking market.
Cabletron would create a separate company out of its Spectrum software unit and possibly others, offering stock for the new company publicly while maintaining a majority ownership, said Bob Travis, Cabletron's director of analyst relations. "If separated [from Cabletron], Spectrum would have opportunities to go aggressively into new markets," Travis said. "Separation would put Spectrum in the spotlight."
Local Cabletron managing director Ian Fewtrell was unable to shed any light on the proposition and its likely impact on the Australian business.
However, he said partially selling off parts of the enterprise, Spectrum and services division whilst maintaining a controlling interest "could only have positive" impacts. Cabletron is in fierce competition with Cisco Systems, 3Com and Nortel Networks' Bay Networks for a dominant share of the computer networking market.
For the fourth fiscal quarter ending February 28, 1999, Cabletron reported net income of $US2.5 million before a fixed-asset loss for idle, obsolete and discarded equipment.
Factoring in the charges, the company lost $8.3 million, down from a loss of $263.4 million for the year-ago quarter.
Revenue for the fourth quarter of fiscal 1999 was $345.1 million, up from $311.5 million from the same quarter a year ago.