Bay Networks is attempting to haul itself back to health after a poor third quarter and the resignation of its chief executive. The third quarter saw the company?s net earnings drop 91 per cent and investors were further shaken when CEO Andrew Ludwick quit last week.
Excluding a charge for acquisition of TV cable modem company Lancity in September, the company?s third quarter net income stood at $48,273, down from $63,168 for the same period last year. Not surprisingly, the company is keen to look beyond this and lay out plans for near term recovery.
The networking company has restructured its business over the past six months to become more customer-centric. It opened up a 'commercial business unit? on Friday to focus on the low end of the market and has undergone a product transition to desktop switching in an effort catch up with arch-rival Cisco, which has stolen a lead in this arena.
Dick Eyestone, senior vice president of Bay Networks, admitted yesterday that the company?s assumptions about the switching market, made two years ago, had not proved as accurate as he had hoped. Having invested heavily in a segment switch strategy, Eyestone said that Bay was caught out when ?the desktop switching market moved faster than we thought it would". But he added: "Some larger enterprises are moving back to segment switching where they can retain investment on shared media.?
Currently the low end or commercial side of Bay's business accounts for only five per cent of sales, in a company that has traditionally targeted enterprise solutions, but Eyestone says the target is to increase that to 10 per cent or more within two years. ?If you ignore this space you?re in danger of getting chewed up from below,? said Eyestone. ?It's a big growth market, worth about $2 billion today and moving up to $6-7 billion in the next two years.?
At the high end, Eyestone is confident that the company will continue to be a match for Cisco. ?Cisco?s primary interest is in protecting its router cusomter base which is primarily in education and federal government. Virtually all our business is in the commercial space,? he said. ?We think there is a fundamental dynamic at work in the marketplace, which is this whole personal networking, Intranet thing. If we build products that enable this we will win,? he said.
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