Tech Industry

Cabletron posts a profit

The networking firm rebounds from a fourth-quarter loss, but earnings still come in just below expectations.

Cabletron Systems rebounded from a fourth-quarter loss to post a profit yesterday, but first-quarter earnings still came in just below expectations.

Shares in the struggling networking company dropped more than 13 percent today as a result, losing 1.875 to close at 12.4375. The stock has traded as high as 38.5 and as low as 11.4375 during the past 52 weeks.

Cabletron posted net income of $6 million, or 4 cents a share, compared with net income of $58.8 million or 37 cents a share for the same period a year ago, excluding charges related to the acquisition of Yago Systems.

Including $163.6 million in acquisition charges, the company posted a loss of $152.3 million, or 93 cents per share. A consensus estimate pegged Cabletron's earnings at 6 cents per share, according to First Call.

Revenues for the first quarter of fiscal 1999 came in at $365.7 million, up from $362.7 for the same period a year ago.

As part of its earnings announcement, Cabletron also announced the long-rumored acquisition of NetVantage in a stock deal valued at about $100 million. NetVantage is a manufacturer of Ethernet-based switches that specializes in equipment maker relationships to sell its equipment.

Cabletron is attempting to recover from one of the first tumultuous periods in its history. Under the guidance of cofounder and CEO Craig Benson, the company is attempting to re-focus on its core customer base, even as it expands into new markets via acquisition.

"We think we've positioned ourselves very well for the future," said Benson. "Overall, we feel fairly good about the numbers we've put up this quarter."

The NetVantage acquisition provides Cabletron with an increased channel presence, tapping a market on which the company is increasingly focused.

The move builds on the sales channels Cabletron acquired via its purchase of Digital Equipment's networking division last fall.

Benson said some "integration issues" remained pertaining to the Digital acquisition due to that company's merger with Compaq Computer, but said that, overall, the work was "going fairly well."