CNET también está disponible en español.

Ir a español

Don't show this again

Spotify Wrapped 2020 Pfizer COVID vaccine approved in UK Fortnite season 5 Trump's Section 230 threat Salesforce to buy Slack PS5 restock coming Second stimulus check

Cabletron stock plunges

Shares in the networking firm are hit hard in trading as it anticipates lower-than-expected revenues and profits for the June quarter.

Cabletron Systems' (CS) stock was hit hard in morning trading as it added its name to the growing list of companies that anticipate lower-than-expected revenue and profits for the June quarter.

The networking company's stock plunged over 33 percent in early trading today, from yesterday's close of 45-3/4; it had jumped past its five-year high of 46-1/2 just days ago.

The dive comes on the same day that Cabletron announced new technology to tie existing local switching hardware to wide area networks. (See related story)

Merrill Lynch lowered its rating of Cabletron to "near-term neutral" from "accumulate." J.P. Morgan downgraded the company to "market performer" from "buy." FAC Equities downgraded Cabletron to "neutral" from "buy," and said it expects fiscal 1998 earnings to be in the range of $1.60 to $1.70 a share and 1999 estimates to be near $2 a share.

Salomon Brothers downgraded Cabletron to "hold" from "buy" and removed the stock from its recommended list. Salomon said it trimmed fiscal 1998 earnings estimates to $1.75 a share from $2.22 a share, and trimmed the 1998 revenue estimate to $1.56 billion from $1.8 billion. Salomon also cut the fiscal 1999 estimate to $2.30 a share from $2.75 a share and cut the 1999 revenue estimate to $2 billion from $2.3 billion.

The company expects earnings for the first quarter of fiscal 1998 to meet or slightly exceed net income of $57.1 million, or 37 cents a share, reported for the first quarter of fiscal year 1997. Wall Street analysts were expecting profits of 50 cents a share, according to First Call.

Revenues are expected to be between $360 million to $370 million, compared to $324 million for the first quarter of fiscal 1997. The company expects to release final results for the first fiscal quarter on June 23.

The company said demand for its newer high-end switching products, such as MMAC-Plus 6, SmartSwitch 6000, and for its Spectrum Software, appears to have been strong during the quarter, but softer for its traditional shared media products and some other older products.

Cabletron also attributes shortfalls to delays in production availability of the new SmartSwitch products which may have resulted in some lost sales opportunities. The company added that sales for some operations, particularly Europe, fell substantially short of their targets at the end of the quarter.

Cabletron Systems provides high-performance intranet and Internet solutions, including LAN and WAN switches, remote access products, and advanced network and systems management software. Last quarter, Cabletron reported fourth-quarter earnings of $60.3 million, or 39 cents a share, for the quarter ending February 28, and a 26 percent jump in fourth-quarter revenues as it ramped up expansion and enlarged its sales distribution.

Reuters contributed to this report.