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April 3, 1996

NETWORK PERIPHERALS FOCUSES ON FAST ETHERNET

By CBR Staff Writer

Network Peripherals Inc of Milpitas is redirecting its development and marketing to Fast Ethernet products, having decided that it has underestimated the popularity of the technology. As a result, fewer resources are to be put into the other technologies supported by the company, notably FDDI. The news coincided with the company completing the acquisition of Taiwanese Fast Ethernet specialist NuCom Systems Inc (CI No 2,857). Truman Cole, vice-president and chief financial officer of Network Peripherals, is at pains to say that existing FDDI products – and current FDDI research and development projects – are not being abandoned, but that the lion’s share of new product development will be on Fast Ethernet. He admits the company probably underestimated the impact of Fast Ethernet, particularly in the high-volume workgroup market where Network Peripherals has traditionally been strong, and where FDDI is not really the appropriate cost structure. As a result of the refocusing, Network Peripherals expects reduced profits for the current quarter, which ended on March 31. This will be as a result of new marketing programs, value-added reseller recruitment and new staff being taken on in marketing, sales and engineering. The integration of NuCom, rebalancing of distributor inventories, and valuation adjustments to FDDI inventories are other contributing factors, says the company. Sales for the quarter are expected to be in the range of $9.5m to $10m, but the NuCom acquisition is expected to result in one-time charges of $11m to $13m. Excluding this one-time charge, the company is forecasting a small operating loss for the quarter with approximately break-even at the net profit level.

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