Bay Networks and Ascend Communications both reported results ahead of Wall Street forecasts on Tuesday, suggesting a return to higher growth for the data networking industry.
Bay Networks - best known for its high speed switches - reported net income of $59.5 million (excluding charges) for the second quarter ended 27 December - compared with a net loss of $172.9 million for the same period one year ago.
Reported earnings of 27 cents a diluted share for the last quarter came in two cents ahead of market estimates.
Ascend, which supplies networking to large Internet service providers and telcos, announced Q2 net income of $47.6 million and shares valued at 24 cents - again, two cents ahead of the Wall Street predictions.
However, net income for Ascend was still well down on $64.5 million the previous year, after a profit-draining acquisition with Cascade Communications. p> Analysts doubted the results signal a boom for the networking sector. ?Cisco is the only company that you can be confident in. Analysts just don?t trust any other company,? claimed Fred Cohen, senior analyst at the Daiwa Institute of Research. ?It managed to avoid any problems last year unlike rivals such as Cabletron and 3Com.?
Cohen betted on steady growth for Bay and Ascend over the next two years for a market still shaken by the economic crisis in East Asia.
He also predicted that the merger mania of 1997 would continue this year: ?Lucent is making an acquisition every few months at the moment and Cisco seem eager to acquire smaller companies,? he said.
Ian Keene, an analyst at Dataquest, forecasts steady growth for the US market: ?A lot of people are saying that the American market is slowing down,? he said. ?Because so many vendors experimented with new technology last year the pay-off will only come in the long term.?
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