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Cabletron Systems continues stock slide

Stock in network equipment provider falls more than 8 percent, one day after the company posted quarterly results below revised estimates.

Stock in network equipment provider Cabletron Systems fell more than 8 percent today, one day after the company posted quarterly results below revised estimates.

The dismal earnings announcement capped a tumultuous year for Cabletron, as the company's share price fell to 8.1875 as the market closed today. The stock has traded as high as 17.125 and as low as 6.625 in the past 52 weeks.

Yesterday, Cabletron announced a loss of $21.2 million, or 12 cents per share, for its third quarter on revenue of $329.9 million. The company warned Wall Street earlier this month that it would post a loss of about 10 cents per share, rather than the 11-cent profit analysts had expected, according to consensus estimates compiled by First Call.

Cabletron's continued woes contrast the pre-Christmas boost that has fueled the performance of various competitors, such as 3Com and Cisco Systems. 3Com today again beat consensus estimates for its second quarter, reporting earnings of $132.9 million, or 36 cents per share, on a 29-percent increase in revenue year-over-year.

Cabletron's loss compares with net income of $19.9 million, or 12 cents per share, on revenue of $331.8 million for the same period a year ago.

It had appeared that Cabletron may have been out of the woods after the company beat second quarter estimates, even as revenue continued to shrink.

For its most recent quarter, the company also incurred charges of $74.7 million, or 38 cents per share, related to the completion of three acquisitions for its most recent quarter. Including the charges, Cabletron posted a loss of $85 million, or 50 cents per share, for the quarter.

Will there be a rebound?
Some wonder whether Cabletron can re-capture its position as a high-flying provider of networking equipment.

"We've obviously had a disappointing quarter," said Craig Benson, chief executive at Cabletron.

When Cabletron pre-announced its revenue shortfall earlier this month, it pointed to a significant drop in sales of equipment through telecommunications equipment providers such as Lucent Technologies and Northern Telecom, a drop in sales of so-called "shared" network devices, and slow sales through Compaq Computer, a key licensee of Cabletron equipment.

Executives at the firm pointed to these factors as evidence that things are not as bad as they may seem. "I feel pretty good about where we stand," Benson said.

Benson said a re-worked deal with Compaq--which plans to open up its entire sales channel to Cabletron's networking equipment--is expected to be closed in the next 30 to 40 days. The original agreement was inherited by Compaq when it acquired Digital Equipment.

The company also said its approach to sales is being re-examined, largely due to the arrival of Carl Boisvert, its new executive vice president for North and South America sales. Cabletron has blamed back-ended sales--sales expected to close near the end of the quarter--as a significant factor in its recent earnings shortfalls.

Boisvert said he has noted a "lack of discipline" in the Cabletron sales force, a problem that is now being addressed. "Accountability is now apparent," he said.

The acquisitions completed in the quarter include NetVantage, a component of Ariel, and FlowPoint.

CNET News.com's Corey Grice contributed to this report.