Still some life in Cabletron

By Bob Brown
Network World Fusion, 08/28/00

Back in February, when Cabletron announced its plan to split into four parts, I half thought that would be the last we'd hear of the company. Or that we'd only hear about its spinoffs getting gobbled up one by one.

But I have to admit, the spinoffs aren't acting like they're lined up on death row. They've got IPOs, acquisitions, new products and new ad campaigns all set to go. So sure, they might still get snapped up, but not without a spirited fight or maximizing their value.

Take Enterasys, the Cabletron company focused on enterprise network gear. It just made news by snapping up VPN product vendor Indus River for a relatively measly $170 million. Enterasys says VPN technology represents one of the four cornerstones of enterprise networks that Enterasys is all about. The other areas are LAN switching, WAN routers and wireless LANs.

The company - by far the biggest of the Cabletron spinoffs with $177 million in first-quarter revenue - recently told one of my colleagues that it is ignoring what it considers "low-hanging fruit," such as the small office/home office market, that 3Com and others address.

The company's attempt to really focus could pay off even if the enterprise network equipment market is growing more slowly than the carrier equipment market these days.

Then there is Riverstone Networks, the Cabletron spinoff that is focused on the carriers, plus ISPs, application service providers and other assorted xSPs. I recently met with company CEO Romulus Pereira, who has high hopes for the company given the voracious appetites of service providers for new gear. The Riverstone equipment gives service providers a platform on which to build and deploy new services quickly.

Riverstone is likely to follow in Enterasys' shoes soon and make its first acquisition, probably in the optical network area. Riverstone is in the hottest area of any of the spinoffs, so if the IPO it has planned for November is a success, the company could make a name for itself. After all, the company essentially is YAGO Systems, a well regarded start-up that Cabletron snapped up and then bolstered with its financial and other resources.

Cabletron's net management firm, Aprisma, also is on a roll. Like Riverstone, the company is taking advantage of the explosion in new service providers. About three-quarters of the company's first-quarter revenue came from service providers, whereas Aprisma's Spectrum software was once considered largely an enterprise network offering.

While the game plan for Aprisma's IPO is still up in the air, Vice President of Marketing Darren Orzechowski tells me that the company is getting ready to make lots of other noise. It will soon launch a new branding campaign, and like its fellow Cabletron spinoffs, expects to start making acquisitions soon. Among other things in the works at Aprisma are an increased emphasis on the emerging management service provider market and the rollout of Prism, sophisticated modeling technology for network, system and application management.

The fourth Cabletron spinoff, Global Network Technology Services (GNTS), is perhaps the lowest key of the bunch. But consulting firms like GNTS, which caters to enterprises and service providers, are in demand. In fact, such companies were among the biggest winners in the most recent quarterly PricewaterhouseCoopers/Network World Venture Capital Survey, which tracks what start-ups are getting the most venture funding.

Odds are that not all the Cabletron spinoffs will be winners. But given the direction in which Cabletron was headed, I'd have to say even a couple of success stories would make for a pretty nice turnaround.