Cabletron outsources manufacturing

Cabletron has announced a major restructuring programme, as it reported poor fourth quarter results at the end of a disappointing fiscal year.

Excluding a fixed asset loss, the networking company made a Q4 profit of $2.5m, on net revenues of $345m, which were up 9.7 per cent compared with last year. For the fiscal year, profit before charges was $130m on sales of $1.4bn.

However, the company said its restructuring initiative - code-named Project Ignition - will reduce costs, increase cash reserves, lead to a higher return on assets and revenue per employee, and generally improve the balance sheet.

Central to Project Ignition is the outsourcing of a large part of the company's manufacturing operations to Celestica.

Cabletron's Ohio operations will be closed with the loss of 300 jobs, while operations elsewhere will see a split between workers joining Celestica, or remaining in-house. In Ireland, manufacturing facilities in Limerick and Shannon will remain Cabletron-owned, but the company promised it will soon be "leveraging Celestica's expertise in materials procurement and manufacturing efficiencies".

Cabletron forecast Project Ignition will save it over $50m over the next year.

An advertising campaign billing the company as 'Your Business Communications Specialist' is set to hit the press, but there is still speculation that an acquisitive networking or telecoms player, such as Alcatel, Ericsson or Lucent, will launch a takeover bid.