Cabletron Shares Plunge on CEO Comments - InformationWeek

InformationWeek is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

IoT
IoT
News

Cabletron Shares Plunge on CEO Comments

Shares of highly regarded Cabletron Systems Inc. cratered Thursday after company CEO Piyush Patel filled in details about a planned corporate restructuring. The stock fell about 42%, to $28.75, after Patel said the restructuring would draw focus away from the firm's profitable legacy-system infrastructure business.

The company said late last year that it was going to morph into a holding company over four business units. Goldman Sachs started the slide after Patel's remarks Wednesday afternoon by downgrading Cabletron stock from "market outperform" to "market perform."

"Analysts were not expecting him to get rid of revenue streams" such as the legacy-systems business, says Matt Robison, an analyst at Ferris, Baker, Watts. "They knew some change would be announced, it just didn't line up with what they had expected."

Other analysts, however, blamed the drop on overall market losses. "The restructuring is old news, and some analysts are simply overreacting to the size and scope of the spin-offs," AG Edwards analyst Peter Andrews says. "Cabletron will be cleaning house, dropping old product lines. Though we'll be seeing a step-down in revenue for the immediate future, it will help the bottom line in the long run."

Cabletron ended fiscal 2000 on Feb. 29 with increases in net sales and net income. It also reported its fifth consecutive quarter of meeting or exceeding Wall Street expectations. Net sales for the quarter were $381.8 million, compared with $371.7 million a year ago. Net income for the quarter was $28 million, or 15 cents per diluted share, up 650% from net income of $3.8 million, or 2 cents per diluted share, a year ago.

We welcome your comments on this topic on our social media channels, or [contact us directly] with questions about the site.
Comment  | 
Print  | 
More Insights
2021 State of ITOps and SecOps Report
2021 State of ITOps and SecOps Report
This new report from InformationWeek explores what we've learned over the past year, critical trends around ITOps and SecOps, and where leaders are focusing their time and efforts to support a growing digital economy. Download it today!
InformationWeek Is Getting an Upgrade!

Find out more about our plans to improve the look, functionality, and performance of the InformationWeek site in the coming months.

News
Pandemic Responses Make Room for More Data Opportunities
Jessica Davis, Senior Editor, Enterprise Apps,  5/4/2021
Slideshows
10 Things Your Artificial Intelligence Initiative Needs to Succeed
Lisa Morgan, Freelance Writer,  4/20/2021
News
Transformation, Disruption, and Gender Diversity in Tech
Joao-Pierre S. Ruth, Senior Writer,  5/6/2021
Register for InformationWeek Newsletters
Video
Current Issue
Planning Your Digital Transformation Roadmap
Download this report to learn about the latest technologies and best practices or ensuring a successful transition from outdated business transformation tactics.
White Papers
Slideshows
Twitter Feed
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.
Sponsored Video
Flash Poll