Tech Industry

Cabletron to split into four companies

Cabletron Systems (NYSE: CS) will draw and quarter itself to become more nimble.

After market close Thursday, the network equipment vendor unveiled a proposal to break into four operating companies. Shares of Cabletron traded at 34 7/8 in afterhours activity immediately following the announcement. Cabletron gained 1 3/4 to 34 1/2 in Thursday's regular trading prior to the announcement.

In recent months Cabletron stock has rebounded on a combination of upbeat earnings reports and a sense the company was sharpening its focus. Despite the resurgence, Cabletron shares still trade at cheaper levels than other network hardware companies.

Cabletron recently took the first step in its reorganization when it recently sold FlowPoint Networks. At the time, Cabletron said would look at other ways to seize on the rapid growth in the network equipment industry.

The new operating companies include Riverstone Networks, which will sell hardware to communications service companies; Enterasys Networks, for corporate data networking equipment; Global Network Technology Services, a network consulting and services firm; and Aprisma Management Technologies, a vendor of network management software.

"This transformation is consistent with the way we are approaching these markets today -- aligning our organization and resources to the customers we serve," said Piyush Patel, CEO and president of Cabletron.

The four units are currently Cabletron subsidiaries, but will eventually trade as separate entities and be spun out to Cabletron shareholders, the company said.

"Our action today has a single purpose -- to give us the focus and agility to seize these market opportunities and better serve our customers," Patel said. "Each of these companies will speak with clarity of purpose to its shareholders, customers, partners and employees."