Clouds of controversy hang over Cabletron's silver lining

Clouds of controversy hang over Cabletron's silver lining

"Problem" is a dirty word around the corridors of Cabletron Australia.

The local outfit appears remarkably resilient in the face of what many resellers and industry observers believe is the appearance of more cracks in the networking vendor's armour.

The company caught the spotlight again recently when two senior executives resigned just days after co-founder and CEO Craig Benson announced his own exit stage left.

This time it was John D'Auguste, president of operations, and Allan Finch, vice president of worldwide marketing, on the chopping block.

Many local resellers, however, have never even heard of D'Auguste or Finch - or even new CEO, former YAGO boss Piyush Patel. But news of the movements adds to years of speculation about management difficulties, poor financial results and buyouts.

At the time of Benson's resignation, for example, Cabletron reported a loss of $US245 million for fiscal 1999.

Meta Group program director, Michelle McLean, was the latest observer to fire up the Cabletron debate at an executive briefing in Sydney earlier this month.

McLean told ARN sister publication ComputerWorld the company "really needs to get bought" to give customers some long-term viability.

She believes Cabletron risks fading into the background as the industry continues to consolidate around dominant players and the company is apparently left without an attractive suitor in the wings.

"Nortel slapped it in the face when it bought Bay," McLean said, adding that Cabletron was a key partner of Nortel and Alcatel, which recently acquired Xylan. Resellers contacted by ARN have voiced concerns about Cabletron, ranging from poor channel support to the belief it still suffers from difficulties encountered by integrating the former Digital networking division. Others simply believe it faces tough times ahead against rivals such as Cisco, Nortel and Lucent.

Of the resellers who were prepared to comment, Mitch Radomir, NetStar's business development manager, said any positive or negative effect of management changes in the US usually takes between one and two quarters to filter down to Australia.

"Nationally, Cabletron is really going to have to work hard to grow revenues over the next 12 months," he said.

Laurie Stevens, managing director of another Cabletron reseller, Anite, only offered a polite "no comment".

One small Cabletron reseller, who asked not to be named, said the company's new tiered reseller levels are forcing him to renegotiate with the vendor. The structure will make it difficult to reach margin targets because he wants to remain small.

"Cabletron was at its best as a direct seller into the marketplace. Things started to unravel several years ago [worldwide] when they began to try to woo the reseller community and, given their past history, there is very limited trust out there for Cabletron's strategy," he said.

"So I think it has been, and will be, a tough haul for them to get some excited big players out there in integrator land," the reseller continued. "Which is a pity, because their products have consistently been the best in the industry. A case of exceptional engineering combined with appalling marketing strategies."

It appears what to some is a cloud of doubt is actually a silver lining, according to Cabletron Australia's managing director, Ian Fewtrell.

He said between 70 and 80 per cent of Cabletron's business is conducted through the channel.

"Loyal partners are the ones who are experiencing the benefits," Fewtrell said.

In commenting on some of the resellers' concerns, he said: "We have to market with passion and create pull-through for the channel."

Fewtrell was quick to dispel any assumptions the US staff changes will have an adverse impact on the com-pany and remains characteristically optimistic about the company's future in Australia.

"It's the most upbeat I've seen it for many years," Fewtrell commented. "The US [Cabletron operation] is absolutely walking on air."

Fewtrell's confidence in the Australian operation comes from what he says is a raft of significant enterprise deals on the near horizon.

In addition, he closely monitors Cabletron's US share price which "doubled" recently to around $US22.

Ian Ramsay, managing director at exclusive Cabletron distributor Hallmark, reports sales are "going gangbusters".

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