Cabletron yesterday announced a return to profitability. It posted fourth-quarter 1999 earnings of $2.5 million, or 1 cent per share, on sales of $345.1 million.
Cabletron also kicked off a turnaround program, dubbed "Project Ignition," to streamline company operations, reduce costs and stimulate revenue growth. As part of Project Ignition, Cabletron is outsourcing its manufacturing operations to Celestica, a Canadian electronics company.
Analysts expect the outsourcing arrangement to save Cabletron $50 million.
For the same period a year ago, Cabletron posted revenue of $311.5 million and a net loss of $6.3 million, or 4 cents per share.
In preparation for its new initiatives, Cabletron recognized a fourth-quarter 1999 fixed asset loss for idle, obsolete and discarded equipment. Including this loss and other charges, the company reported a net loss for the fourth quarter of $8.3 million, or 5 cents per share, compared with a net loss of $263.4 million, or $1.67 per share, in the same period last year.
Exclusive of the fixed asset loss and special charges, however, net income increased $23.5 million sequentially. Layer 3 switching revenue represented approximately 15% of overall fourth-quarter revenue, Cabletron says, while sales of shared media hubs and LAN switches accounted for 8% and 63%, respectively.
Cabletron also says current headcount and inventory are the lowest in three years.
