Cabletron Systems, Inc., which has announced plans to buy NetVantage, Inc., posted a first-quarter loss of $152.3 million on sales of $365.7 million as a result of its earlier acquisition of router and switch maker Yago Systems, Inc.
Excluding Yago acquisition-related charges, Cabletron would have posted earnings of $6 million, or 4 cents per share, for the quarter ended May 31. A year ago the networking company reported first-quarter earnings of $58.8 million, or 37 cents per share, on sales of $362.7 million.
A consensus estimate of analysts polled by First Call Corp. predicted Cabletron's earnings for the first quarter of 1999 would be 6 cents per share.
Cabletron has been acquiring companies at a fast clip in recent months. In March, it completed its acquisition of Yago, of which it previously owned 25%. In February, it acquired Digital Equipment Corp.'s Network Products Business for $430 million.
Last week, the growing networking company announced plans to enter the digital subscriber line (DSL) market with two more acquisitions. Cabletron said it would pay $25 million for FlowPoint Corp., maker of xDSL and ISDN equipment, and $33.5 million for Ariel Corp.'s Communications Systems Group, which offers asymmetrical DSL-to-ATM equipment.
With NetVantage, Cabletron gains a provider of Ethernet workgroup switching equipment. The stock swap is valued at about $100 million. With the acquisition, Cabletron hopes to expand its presence in the indirect sales channels and in the 10/100M bit/sec LAN switching market.
Meanwhile, the special charges for the Yago acquisition totaled $158.3 million, or 97 cents per share, and included one-time charges for in-process research and development and other expenses.
"New initiatives, including an expanded channel program, aggressive acquisition strategy and renewed focus on our core product lines, helped contribute to Cabletron's performance this quarter," said CEO Craig Benson in a statement.
The quarter has been a tumultuous one for Cabletron. In March, it laid off 180 full-time employees at manufacturing plants in New Hampshire and Ohio and underwent a management reorganization later that month with firings of top executives and the replacement of then-CEO Don Reed with co-founder Benson. Reed had been the CEO since August 1997, when he replaced Robert Levine.
In April, Cabletron announced plans to change its pricing structure, eliminate some older products and organize the company's sales and marketing according to services, not products.
The company's first-quarter loss follows losses of $127.1 million, for fiscal year 1998 and $6.3 million, for the fourth quarter of 1998.
RELATED LINKS
Network World, 4/8/98
Cabletron snaps up Yago Systems
IDG News Service, 1/15/98
Benson aims to break Cabletron from the pack
Includes links to other Cabletron articles.
Network World Fusion, 4/16/98
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