Cabletron has reported a profit during its latest quarter, but will lay off hundreds of staff as it outsources most of its electronics manufacturing.
Networking equipment vendor Cabletron reported a net profit of $2.5 million, or $0.01 per share, for the fourth quarter ended 28 February, 1999, excluding a fixed asset loss for idle, obsolete and outdated equipment of $17.6 million.
During the fourth quarter a year earlier, Cabletron reported a net loss, excluding special charges, of $6.3 million, or four cents per share.
Sales for the quarter were up slightly to $345 million from $311 million a year earlier. For the full fiscal year, sales were $1.4 billion and profit before charges was $130 million, or $0.82 per share.
Cabletron also confirmed late yesterday that it will outsource "substantially all" of its manufacturing operations to Canadian manufacturer Celestica. Cabletron will close its Ironton, Ohio, factory with the loss of 300 jobs following the deal.
"We look forward to providing Cabletron with a comprehensive range of electronics manufacturing services," said Eugene Polistuk, chief executive of Celestica.
But for Cabletron's 5,951 employees the news was less positive. Cabletron's chief executive Craig Benson told analysts yesterday that he expected the company to employ less than 5,000 staff by the end of the year.
"We unfortunately had to outsource our manufacturing. It's a huge change for us, but the new concept is much more focused in the areas we can add value," said Benson. "We will be the leaders in the marketplace."
Cabletron has historically found business tough going, with a narrow product line, weak marketing and channel sales, as well as battling against reduced demand for devices such as hubs.
Analysts blame the company's management and have suggested that Benson should resign. Cabletron has also long been muted as an acquisition target for a networking player such as Ericsson, Lucent, Nortel or Compaq.
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