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Cabletron in dire straits

Company warns of third-quarter loss -- analysts foretell doom

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Any hopes that Cabletron had picked itself up after a disappointing year has been squashed after the third biggest producer of computer networking equipment warned of a fiscal third-quarter loss. Cabletron said it would report a loss of around ten cents a share, before charges, despite earlier predictions that it was expected to earn 11 cents a share. Revenue will range from $330 million to $340 million -- compared with $331.8 million last year -- the company has said. Cabletron blamed the loss on poor sales. This latest batch of bad news has come as bitter disappointment to the company and analysts believe it leaves Cabletron with little room for manoeuvre. Unless there is a dramatic turnaround, Cabletron will either have to team up with another company or find a buyer. "I don't believe they will survive on a go-forward basis unless they find a partner," said Craig Johnson, an analyst with the Pita Group. But Megan Graham-Hackett at Standard & Poor's Rating Service is even more blunt. "They've got a couple of assets that are attractive enough in a rapidly consolidating industry. They're definitely positioned to be taken over," she said. Cabletron's position has been made even more acute because it's been saddled with an outdated product line, analysts are saying, as it tried to compete with rivals Cisco Systems and 3Com which have both introduced more advanced products. The New Hampshire-based company has said it will publish the quarter's results on 21 December. Earlier this year Cabletron spent $372 million acquiring a number of companies including NetVantage, FlowPoint, Ariel Communications Systems Group and Yago Systems. ®

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