Mr. Jaeger: Cabletron was founded in 1983, and within a few years, became a dominant player in the data networking industry next to Cisco Systems, Bay Networks and 3Com. Last year Cabletron announced a transformation strategy to further the company's competitive advantage and ignite top-line growth. Cabletron's product lines were reexamined and refocused on the company's four areas of expertise. In effect what we accomplished less than one year later, was a significant business achievement. Cabletron's management team effectively transformed the company into four individual startup companies that have emerged as market leaders with laser focus on high growth markets. Today, each one of these companies operates independently of Cabletron Systems.
TWST: Can you explain your recent financial history?
Mr. Jaeger: After its founding, Cabletron had 32 record quarters of
growth, driving the company to over $1 billion in revenue, 5,000
employees, a NYSE listing and a place on the S&P 500 Index. In the
mid-1990s, a technology shift occurred, and Cabletron was admittedly
somewhat late in introducing new products to the market. I think that
caused a significant change, both in Cabletron's management team and in
its strategy. The strategy, dubbed the 'transformation strategy,'
shifted the company's focus from trying to attack every sector of the
market with complete end-to-end solutions, to being a company focused
with greater intensity on our core competencies. Clearly Cabletron's
current CEO, Piyush Patel, was one of the key driving forces behind
Cabletron's transformation. Piyush Patel became CEO of Cabletron Systems
in June 1999. Piyush began the initial transformation by refining
Cabletron's vision and refocusing the business on fundamentals. First
steps included selling off non-core businesses, such as our Flow Point
DSL business to Efficient Networks. We also outsourced our manufacturing
to Flextronics, which dramatically improved our margins.
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