Cabletron Systems (NYSE: CS), a holding company for leading networking and telecommunications companies, today reported its first quarter results of fiscal year 2002 for the period ending June 2, 2001.
"We are very pleased with our results for the first quarter, particularly in view of the challenges presented by the prevailing economic conditions," said Piyush Patel, CEO and Chairman of Cabletron Systems. "In addition to strong revenue performance, we delivered increased profitability for the tenth consecutive quarter. These results underscore the continued strength and momentum of the operating companies' business fundamentals."
The combined revenues of the four subsidiaries for the first quarter of fiscal 2002 were $311 million, compared with $291 million in the prior quarter and $217 million in the first quarter of fiscal 2001.
On a pro forma basis, Cabletron's subsidiary companies' net income increased to $14.5 million, or $0.08 per diluted common share, compared with pro forma net income of $10.7 million or $0.06 per diluted common share in the fourth quarter of fiscal year 2001. Cabletron has met or exceeded Wall Street's expectations for the tenth consecutive quarter.
Cabletron's consolidated net income to common shareholders increased to $9.8 million or $0.05 per diluted common share for the first quarter of fiscal 2002.
Patel stated, "Our strong results illustrate the inherent power of the transformation strategy. I am very excited that Cabletron is moving forward with the final stages of its transformation toward the goal of unlocking shareholder value."
Today, Cabletron announced the following:
· With respect to Riverstone Networks, Cabletron expects to complete the spin-out at the end of July or early in August. A final date will be established and announced in mid to late July, approximately ten to 14 days prior to the actual distribution.
· With respect to Enterasys, Cabletron has developed a rapid timetable for establishing Enterasys as an independent public company. This is now expected to occur in August, immediately following the Riverstone spin-off. As the first step in the process, Henry Fiallo, the President of Enterasys Networks, will hold a conference call on July 10 at 5pm EST. During the conference call, Henry will provide greater insight into Enterasys' strategy. Immediately following that call, Cabletron will host a short call to discuss and answer questions concerning the remaining transformation steps.
· With respect to Aprisma, Cabletron is proceeding to take the steps necessary to establish Aprisma as an independent public company. Cabletron currently expects to proceed with a direct spin of Aprisma to Cabletron's shareholders, and has begun work on the necessary regulatory filings. Cabletron expects to move forward as rapidly as possible, with the goal of completing the spin-out of Aprisma, subject to market conditions, no later than December 31.
· With respect to GNTS, Cabletron expects to announce either a sale or other disposition by July 16.
These steps mark the culmination of the transformation launched by Cabletron just over a year ago to create independent public companies focused on high growth segments of the networking marketplace. "Even with the challenging economic conditions of the last several quarters, the transformation has successfully increased the revenue growth, profitability and competitiveness of the operating companies," said Piyush Patel. Patel concluded, "Based on their exceptional performance over the last ten quarters, I remain extremely confident in the operating companies' ability to continue to execute successfully as independent companies."
First Quarter Highlights:
Aprisma Management Technologies is a leader in the rapidly growing infrastructure management market focusing on intelligent root-cause analysis and scalable service assurance software. Aprisma's award winning SPECTRUM-powered suite product delivers Service Level Intelligence across multivendor network, system, application and security infrastructures. Aprisma is capitalizing on its proven ability to integrate and correlate data from different applications to a central repository and then identify the root-cause of the problem or the potential issues that could result in service degradation or network failure while suppressing meaningless alarms.
For the first quarter of fiscal 2002, Aprisma posted revenues of approximately $22.3 million, compared with revenues of $21.9 million in the prior quarter and $15.1 million in the first quarter of fiscal 2001. Aprisma's continued focus on profitability yielded a record gross margin of approximately 75% and allowed the company to increase its pro forma earnings before taxes to approximately $1.4 million.
· Important customer wins during the quarter include: Navic Networks, UPC Europe, US Wireless On-line and Yipes. Aprisma also expanded its presence within AT&T Broadband, Credit Suisse First Boston, Deutche Telekom, Northrup Grumman, Qwest and Telus.
· Aprisma announced the SPECTRUM Application Manager, which integrates existing systems for the purpose of instantly pinpointing the root cause of issues affecting business systems and applications. This innovative technology expands Aprisma's market reach into the systems and application management sector, which Gartner expects to grow to $5.4 billion in 2004.
· In addition, Aprisma established new alliances with BMC, Compaq, Greenwich Technology Partners and ThruPoint Systems.
Enterasys Networks is a provider of enterprise network solutions required to serve emerging bandwidth-intensive enterprise and e-business applications, including converged voice and video, distributed supply chain management, and e-commerce. Enterasys solutions are deployed in some of the world's most complex enterprise networks.
Enterasys had revenues of $232.2 million in the quarter, compared with revenues of $221.1 million in the fourth quarter of fiscal year 2001. This result compares to $175.7 million in the first quarter of fiscal 2001, reflecting a year-over-year growth rate of 32.1%.
· New customer wins during the quarter included: Neuberger&Berman, Texas Instruments, Blue Bird, Excite@Home, Cerprobe, Anteon Corporation, Concentra Health, Shandong Power, Ikano Communications, the Palace at Auburn Hills, NATO, BBC, Societe Generale, and Rolls Royce.
· Enterasys announced that, according to the Dell'Oro Group, Enterasys was the only company to show quarterly growth in the Ethernet Switch market. All other competitors lost market share during the quarter. In addition, Enterasys achieved the number one position in worldwide modular Layer 3 port shipments according to the Dell'Oro Group.
· Enterasys also announced the RoamAbout R2 wireless LAN architecture. The R2 is the industry's first 54-megabit wireless access point, which enables high -bandwidth applications to run over wireless networks.
Riverstone Networks (NASDAQ: RSTN) is a leading provider of routers that convert raw bandwidth into profitable services for Metropolitan Area Networks. Riverstone's products enable the delivery of profitable services over next-generation and legacy networks, including SONET/SDH, Gigabit Ethernet, T1/E1, T3/E3, ATM and Dense Wavelength Division Multiplexing. Riverstone's products bring together fourth-generation Application Specific Integrated Circuits (ASICs), battle-tested routing software, and unparalleled media versatility to deliver comprehensive solutions for Metropolitan Area Networks.
· Riverstone announced its first quarter of fiscal 2002 results on June 20, 2001. For more information on Riverstone, a copy of their press release or to listen to a replay of their conference call, visit their web site at: www.riverstonenet.com.
About Cabletron Systems
Cabletron Systems, based in Rochester, NH, was founded in 1983. Initially a provider of world-class networking solutions, Cabletron announced its corporate transformation to a holding company in 2000. Today, Cabletron is a holding company for four of the most innovative, customer-focused organizations in the telecommunications and networking industry: Aprisma Management Technologies, Enterasys Networks, GlobalNetwork Technology Services, and Riverstone Networks. For more information on Cabletron Systems, visit http://www.cabletron.com.
This release may contain projections or other forward-looking statements regarding the future financial performance of the Company or other future events and circumstances. Such forward-looking statements by their nature involve risks and uncertainties, and actual results or events could differ materially. Risks that could cause actual events or results to differ materially from those in described in the projections or forward-looking statements include business disruption and market perceptions associated with the Company's plan to transform its business into four independent operating subsidiaries, as well as risks associated with competitive conditions, pricing and margin pressures as a result of product shifts and changes in market dynamics, greater use of, and expenses associate with, distributors and resellers, limited management resources, the Company's acquisition strategy, volatility in the stock markets and market valuations being placed on communications infrastructure and service companies, technological changes, intellectual property protection and related issues, dependence on suppliers and contract manufacturers, and potential volatility in operating results, among others. For a more detailed discussion of these and other risks and uncertainties related to the company's business, please refer to the Company's most recent filings with the Securities and Exchange Commission, including the Company's most recent annual report on Form 10-K, and the Company's other more recent reports on Form10-Q and Form 8-K.
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