Revenue dip pushes Cabletron into red

Networking equipment and services vendor Cabletron announced a larger-than-expected loss for its third quarter, following a slight drop in sales.

Cabletron reported a net loss of $21.2 million for the quarter ended 30 November 1998, compared with a profit of $19.9 million during the comparable period last year. Loss per share was below analysts' predictions of $0.12 per share, to $0.10, despite the company issuing a statement two months ago warning that it would not meet analsyts' expectations.

Sales were down slightly for the period, totalling $329.9 million, compared with $331.8 million in the same period a year earlier. The company also took an exceptional charge of $74.7 million during the quarter for the acquisitions of Netvantage, Flowpoint and Ariel's Dslam subsidiary.

Cabletron has made life difficult for itself, with a narrow product line, having historically weak marketing and channel sales, as well as battling against reduced demand for devices such as hubs.

Analysts blamed Cabletron's management and have suggested that Cabletron chief executive Craig Benson should resign. The company was also at the centre of speculation that it is an acquisition target for communications giants such as Ericsson, Lucent or Nortel.

In a statement, Benson admitted: 'We have some work to do on our operating basis, but I am enthused by the growth in our key driving sectors.'

He added the company's priority in the coming quarter was to increase revenue.