Cabletron Systems Inc has reported second-quarter numbers that matched expectations for declining profits on revenue that grew only slightly year-on-year. The Rochester, New Hampshire networking company came in with net income of $57.6m, or $0.37 per share – up 56% over last year’s Q2 – but when acquisition charges of $27.1m ($0.17 per share) are figured into last year’s mix, net income actually fell 10%. Wall Street was well-braced for the disappointing news, as it only expected $0.36 per share. Revenue for the quarter grew 9% to $371.3m. Six-month net income rose 24% to $116.4m, or $0.74 per share, on revenue up 10% at $734m. Giving effect to last year’s charge, six-month results show a 5% decline in net income. The company says it is still being hurt by the same conditions that crippled it last quarter, including poor sales of its mature product line and continuing production problems for the new SmartSwitch line. The good news here, say analysts at Deutsche Morgan Grenfell, is that the SmartSwitch production problems were worked out during the quarter and all three of the company’s production facilities are online, leading to revenue that actually exceeded DMG’s expectations. DMG figures it will slightly increase its short- term revenue outlook for Cabletron but may actually trim its EPS estimate. Cabletron is looking at the current quarter, the first under new CEO Don Reed, as the first chapter in the new era. Analysts at First Call expect $0.40 per share, down from $0.44 a year ago.
