Cabletron CEO's bold new plan

Rochester, N.H. - Craig Benson doesn't waste time.

The new self-appointed CEO of Cabletron Systems, Inc. will shake up the network world this week by revealing a new focus for Cabletron, one that will forego the end-to-end solutions touted by its competitors and instead play up Cabletron's key strengths: switching and network management.

Benson's first move is expected to be the acquisition of NetVantage, Inc., a company that makes workgroup Ethernet switches and sells them under OEM agreements to about two dozen well-known network companies. Network World Fusion posted the NetVantage news last Wednesday.

Cabletron may also introduce a new version of Spectrum, its network management software, and may announce upgrades to its SmartSwitch line of products. And Benson could announce the promotions of some Cabletron executives.

If the NetVantage acquisition does happen, it would give Cabletron a big boost, said Esmeralda Silva, an analyst at International Data Corp., in Framingham, Mass. Silva said Cabletron needs a cost-effective 10/100M bit/sec wiring group switch, and she compared NetVantage products to Cisco Systems Inc.'s Catalyst 2900 and Bay Networks Inc.'s 350T. "The 350 product is what got Bay over the hump," she said. "The thing that will make vendors competitive is a switch architecture that is able to react to price declines along with the market."

Cabletron's expected announcements this week will remove the code of silence Benson has imposed at the company since March 30, the day he announced he was replacing Don Reed as CEO. Calls to Benson and other senior executives went unanswered last week, and a reporter was told that Don Reed, who is acting as a consultant, no longer has an office at the company headquarters.

Back to the future

Bob Levine, Cabletron's colorful co-founder and former CEO, was at company headquarters for a second week to speak to the sales force. He was also consulting with Operations President John d'Auguste, but a reporter was told that Levine doesn't have an office at the company.

Reed may be gone, but not all of his ideas will be forgotten. A Cabletron spokesperson said Benson is committed to executing the strategies Reed had begun, including developing a greater presence in the channel, a new direction for a company that until two years ago only sold directly.

Taking NetVantage

NetVantage opened shop in 1991 in El Segundo, Calif., and went public in 1995. The company has had a rough time, although it looked as if it would turn around in 1996. Last year, the company posted $16.9 million in revenue, and a net loss of $18 million.

If Cabletron does acquire NetVantage, the deal could have an almost immediate impact on Cabletron's falling revenue and stock price. Not only would the deal round out Cabletron's low-end switch product line, it would give the company switches that boast the market's lowest prices per port, except perhaps for Extreme Networks' recently announced Summit48 (see NW, April 6, page 56).

"This would be a dynamite way for Cabletron to get into the OEM business," said David Passmore, president of the NetReference, Inc. consultancy in Herndon, Va. NetVantage is sold strictly through OEM agreements, and Cabletron would pick up a lot of channel associations.

On the downside, "I suspect the NetVantage product would lose a lot of its OEM business, because some of these other vendors wouldn't want to be associated with Cabletron," Passmore said.

NetVantage has always been tight-lipped about who it sells to, but several analysts confirmed Hewlett-Packard Co. is among its customers.

The acquisition of NetVantage would give Cabletron immediate revenue in the channel for low-end switches, such as the NV8500 family of Ethernet switches, which offer either eight or 16 10Base-T ports, with two 100M bit/sec uplinks.

Whether buying NetVantage will give Cabletron a quick fix is uncertain, but it makes good on Benson's promise to act quickly.

NetVantage officials were unavailable for comment. Cabletron officials wouldn't comment on the possible acquisition.