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Cabletron to go out with a whimper

Cabletron to go out with a whimper

While Cabletron Systems announced last week it will cease to exist later this season, financial and market analysts say little will change for Cabletron's subsidiaries and their customers as the parent company completes the final step in its transformation strategy.

Cabletron said that on August 6, it will spin off Enterasys Networks directly to Cabletron shareholders. Each share of Cabletron stock will equal one Enterasys share, and the new company will trade on the New York Stock Exchange as ETS. Shareholders will then receive Cabletron's remaining holdings of Riverstone Networks stock on a ratio of 0.51-to-1.

Network management software maker Aprisma Management Technologies will temporarily become a wholly owned subsidiary of Enterasys. Cabletron officials say Aprisma will eventually be spun off as its own public company before December 31, either through an IPO or, more likely, by a direct spin-off to Cabletron shareholders.

Global Network Technology Services, the consulting arm of Cabletron, has been sold off to an unnamed private company and a group of GlobalNetwork executives. Since its establishment, the consulting arm's losses have grown from $4.9 million in the first quarter a year ago to $7.1 million last quarter.

After August 6, Cabletron will cease to operate and its stock will no longer be traded. Cabletron CEO Piyush Patel says he and other members of Cabletron senior management will continue to work with the independent companies as advisers.

While under Cabletron's wing, Enterasys has fared particularly well. Since Cabletron created the company in February 2000, Enterasys has established itself as a player in the enterprise network market. Last year, the company was second only to Cisco in Layer 3 Ethernet and Gigabit Ethernet switch port shipments, according to market research firm, IDC.


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