Cabletron has eye on Digital division

Digital sell-off spree looks set to continue, with rumours of networking unit sale of up to $500 million.

Cabletron Systems is believed to be on the verge of acquiring networking unit sale of up to $500 million. Digital's networking business, in a deal believed to be worth between $400 and $500 million.

According to a source close to Digital, the acquisition of the networking unit is set to go through, with an official announcement expected within the next few weeks.

Digital played down the rumours. In a statement, it insisted its network portfolio includes areas which are integral to its strategy. It claimed that the company will 'continue to explore a variety of possible relationships with other companies'.

Digital's move to sell the networking division follows the vendor's off-loading of its printing arm to Genicom in August, taking its tally of sell-offs to nine since July 1994 (PC Dealer, 18 August).

In an annual shareholders' meeting on 13 November, Digital chairman and CEO Bob Palmer refused to comment on the rumours. But while reiterating the company's intention to deliver platform and services, he failed to mention the networking division.

However, he said: 'We need to find a partner to ensure we can provide a broad range of products. Whether we manufacture them is not important.'

Digital, which has $2.4 billion cash reserves, has been looking to off-load the 1,200-strong division for the past year.

A Cabletron representative would not comment on any rumours about acquisitions, but said: 'Don Reed, Cabletron CEO and chairman, has outlined an aggressive strategy to acquire. He is focusing strongly on the channel and on expanding the company's presence internationally.'

The unit could add up to $400 million annually to Cabletron's $1.5 million revenue, as Digital's networking division garnered about $100 million in operating profit in fiscal 1996.