Cabletron is planning to cut up to 18 per cent of its global workforce as part of its effort to split itself into four separate companies (CRN, 16 February), it emerged last week.
The company also saw its shares plummet 41 per cent after a Wall Street analyst warned that the break-up of the company could cause more problems and take much longer than previously expected.
Investment company Goldman Sachs downgraded Cabletron following statements from Piyush Patel, chief executive of Cabletron, during the announcement of the company's fourth-quarter results.
Cabletron will float the four companies by February 2001. The companies are Riverstone Networks, Enterasys Networks, Global Network Technology Services and Aprisma Management Technologies. Patel told the analysts that his target was to float two of the businesses by the end of 2000.
When Cabletron announced the break-up in February, Patel said the goal was to float all four companies "within a year".
During the same meeting, Dave Kirkpatrick, executive vice-president of finance at Cabletron, also revealed the company is going to cut between 600 and 800 jobs as part of the restructuring. A representative for the company said no decisions about the timing or other details of the cuts have been finalised, including the effect on its UK arm, but added that lay-offs would have to be made "relatively soon".
Despite the uncertainty, Cabletron managed to narrowly beat analysts' predictions in its fourth-quarter results. Turnover for the period ended 29 February rose three per cent to $381.8m (£238.6m), while profit reached $431.2m, compared with a loss of $12.7m last year.
The figure includes $697m gained from the sale of its Flowpoint subsidiary.
Profit for Q4 was $28.1m. Cabletron's profit for the same period last year was $22m.
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