Cabletron?s profits will take a bashing in its third quarter because corporates have shunned its core hub products in favour of faster switches from its larger competitors over the past few months.
Restructuring and layoffs may follow in the fourth quarter.
Yesterday the US-based company warned its Q3 earnings to 30 November would be a quarter of that expected by Wall Street on sales of between $330 million and $340 million, about eight per cent down on the same quarter last year.
A statement blamed the dip on a shortfall or orders because of ?weakness in some domestic segments and delayed government orders?.
Cabletron has been struggling to maintain a position in the premier league of network vendors this year and has lost ground to the likes of Bay, Cisco and 3Com.
But its decision last week to acquire Digital?s network division for $430 million is seen as its best chance to catch up. Digital?s division is strong in high speed switches and IDC estimates that Cabletron and Digital Networks would have a combined network market share of 10.6 per cent, a leapfrog into third place behind Cisco (26.5 per cent) and 3Com (21 per cent) but ahead of Bay at 8.9 per cent.
The company has also announced it will take a pre-tax charge of between $25 million and $30 million in Q4 which may involve reducing the headcount.
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