Fool.com: Cabletron Systems Draws Up Quartering Plan (Breakfast With the Fool) February 11, 2000

BREAKFAST WITH THE FOOL

February 11, 2000

"That which comes into the world to disturb nothing deserves neither respect nor patience."
-- Ren� Char

Cabletron Systems Draws Up Quartering Plan

By Dave Marino-Nachison (TMF Braden)

Networking equipment maker Cabletron Systems (NYSE: CS) last night said it plans to split into four distinct operating companies with a view to eventually having each exist as separate publicly traded entities.

In last night's statement, President and CEO Piyush Patel said, "In order to provide the best possible customer experience in this ever-changing market, we need to transform ourselves to a new business model -- one that allows us to focus exclusively on developing solutions tailored to individual markets and customers. This transformation is consistent with the way we are approaching these markets today, aligning our organization and resources to the customers we serve."

The announcement effectively signals the culmination of the movement former Chairman and CEO Craig Benson initiated before handing the reins of leadership over to then-Senior Worldwide Engineering Vice President Patel last year. (Click here for a Foolish take on the beginning of a resurgence at Cabletron from June.)

A quick look at the company's one-year stock chart suggests investors have supported the new direction and leadership; the shares were up more then 10% in yesterday's trading alone.

The four companies to be created by Cabletron are Riverstone Networks, which will focus on the service provider market, content hosting, application service providers, and so on; Enterasys Networks, which is going after the global enterprise systems business; Global Network Technology Services, a network consulting company; and Aprisma Management Technologies, which will provide infrastructure management software for service provider and enterprise customers.

"We believe that the business is capable of vastly accelerated growth in these key markets," Patel said. Cabletron plans to start the four companies out as subsidiaries before potentially spinning them off to shareholders.

Click here for the company's full press release on the move.

News to Go

PC direct seller Dell Computer (Nasdaq: DELL) turned in fiscal Q4 (ended Jan. 28) financial results last night. The company said year-over-year revenues improved 31% to $6.8 billion, though operating income fell 14% to $436 million. Earnings were $0.16 per share, beating Street estimates by a penny, on net income that was only 3% above year-ago levels. Dell once again blamed inconsistent semiconductor component flow for its slowdown; here's a link to a recent Breakfast With the Fool column that looks a bit closer at the story.

Gallium arsenide chip maker TriQuint Semiconductor (Nasdaq: TQNT) said fourth-quarter revenues rose 60% year over year to $49.4 million. The company credited improved manufacturing efficiencies with a solid expansion of gross margins; operating income, meanwhile, also improved for the quarter and EPS, at $0.55, smashed Street estimates. For more on TriQuint and gallium arsenide chips, hailed as a higher-performance alternative to silicon, please revisit this May Fool Plate Special.

Enterprise software firm Siebel Systems (Nasdaq: SEBL) said IBM (NYSE: IBM) will use its products worldwide to meet its customer relationship management (CRM) needs. CRM is seen as a booming business: Oracle (Nasdaq: ORCL) CFO Jeffrey Henley discussed it, among other things, in this StockTalk interview from last month.

Leading cement maker Southdown (NYSE: SDW) has risen lately on rumors that it may be a buyout candidate, according to Business Week's "Inside Wall Street" column, having reportedly turned down an offer from Blue Circle Industries in December. Blue Circle, Moness Crespi & Hardt's Nick Pantazis told the column, may try again with a richer offer to fend off the hostile advances of Lafarge with the company today saying it will fight its French would-be suitor.

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