Troubled Cabletron Systems Inc, which already warned that it would be way below estimates for its current third quarter, is cutting 600 jobs and closing manufacturing facilities in an attempt to cut costs and restructure its business. The 600 jobs, just fewer than 10% of the company’s current workforce worldwide, will go as the company plans to close facilities and offices in Nashua, New Hampshire and Andover Massachusetts. The majority of the job cuts will be made in the next few months, and Cabletron of Rochester, New Hampshire expects to see a one-time pre-tax charge of $25m to $30m in the fourth quarter of its 1998. The jobs are across the board according to Cabletron, with its direct salesforce, support staff, research and development and administration jobs all being cut. The company says the restructuring will culminating in expected annual savings of between $50 and $60m. It also says that it does not expect its planned $430m acquisition of Digital Equipment Corp’s network product division (CI No 3,298) to be affected by the move. The deal with DEC to help Cabletron’s move into the carrier equipment market has also influenced the restructuring. Cabletron has traditionally sold to customers directly but now says in its effort to sell into the service provider market it is using the unit’s existing indirect sales model. Adding it will concentrate on increasing the distribution of its products through third-party distributors and resellers throughout the world as well as developing partnership and acquisition opportunities. Job cuts were hinted at earlier this month when the company warned that its third-quarter numbers would be well short of analysts’ expectations. Cabletron said figures net income will fall in the range of $0.08-$0.12 per share – when the First Call consensus was $0.39 – down from $0.44 last year. The poor showing for the current quarter follows disappointments in both the first and second quarters.
