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Bay Networks lays off 115

The company says the layoffs are a one-time thing, but industry observers expect more in the future.

There seems to be nothing but bad news from Bay Networks (BAY) these days.

The Santa Clara, California-based company laid off 115 employees, roughly two percent of its 5,600 work force late last week. A company spokesperson characterized the layoffs as a "one-time thing" that is part of an overall restructuring initiated by recently recruited Chairman, President, and CEO David House.

The layoffs come on the heels of poor financial results for the company's recently reported second quarter. The company incurred a loss of $173 million, or 90 cents per share, a loss even larger than analysts' already dour estimates. The loss includes charges relating to recent acquisitions.

House, who spent much of his career at Intel, was brought in to shore up Bay Networks' marketing weaknesses. The company is known to have strong technology, but has not thrived despite a recent boom in networking sales.

A spokesperson at Bay Networks characterized the layoffs as an isolated "streamlining of available resources." But industry observers have their doubts and expect further rounds of cuts.

"This might be the start of a true shakeup, which they need," said Craig Johnson, principal analyst with market research firm Current Analysis, based in Ashburn, Virginia. "It should be good for them."

When Santa Clara, California-based SynOptics and Boston-based Wellfleet Communications merged to become Bay Networks in 1994, there were no extensive layoffs, according to Johnson, although the merger inevitably resulted in some redundant positions. House may be completing a long overdue streamlining within Bay, he added.

The company is expected to rebound in its third fiscal quarter, posting earnings per share of 10 cents, according to a preliminary consensus estimate from First Call. Analysts expects earnings of 58 cents for the company's current fiscal year, which will end in June.