Cabletron reports strong Q1

Cabletron Systems this week reported strong revenue and earnings numbers for its first quarter of fiscal year 2002.

Regarded by some last year as an aging dinosaur in the networking business, Cabletron has emerged as one of the few enterprise/carrier infrastructure companies to show quarterly revenue gains, with no announcements of major layoffs or restructuring. Avaya, 3Com, Cisco Systems, Lucent Technologies and Nortel Networks have all reported layoffs in the thousands and/or lowered quarterly revenue projections over the last three months.

Cabletron ended its first quarter with US$310 million in revenue, up from the previous quarter's sales mark of $291 million, and last year's first quarter intake of $217 million. The company also reported a net income of $14.4 million, up dramatically from the $14.7 million loss Cabletron took in its first fiscal quarter of 2001.

While no longer a technology company in its own right, Cabletron acts as a holding company for its four subsidiaries, which were spun off 16 months ago. The four subsidiaries are: Enterasys Networks, which sells enterprise network hardware; Riverstone Networks, which specializes in Gigabit switches for service providers; Aprisma, which sells the SPECTRUM band of network management software; and Global Network Technology Services (GNTS), a network integration firm.

At the time of the break up, Cabletron said it could focus better on its core markets and better serve customers by splitting into four companies.

Enterasys was the strongest operating company, with $232.1 million in sales for first quarter, or 79% of Cabletron's revenue. Of the four operating companies, all but GNTS faired better this quarter than the last. Formerly the network integration business of Cabletron, Enterasys' losses have grown from $4.9 million in the first quarter a year ago, to $7.1 million last quarter. Cabletron said this week that it would look to sell off the business unit by July 16.

Cabletron's CEO Piyush Patel said in a conference call this week that it would complete the "spin-out" of Riverstone by the end of July, by giving Cabletron shareholders approximately .47 Riverstone shares for each Cabletron share they own. (Riverstone had its own IPO in February, but is still considered an operating company of Cabletron). Patel also said his company plans to spinoff Enterasys by the end of the summer, and Aprisma by year-end.

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