TECH TALK
By Paul Motter (TMF DotCom)

Competition for LAN Switches Heats Up

NEW YORK, NY (July 1, 1997) -- Sales of LAN switching equipment are going to generate less revenue in 1997 than previous estimates, according to the Dell'Oro group, a Portola, California market research firm. It is not that sales are slowing, rather it is the spate of price cuts and increased competition. In the fourth quarter of 1996 sales of shared media hubs were down 10% (according to the report) but ethernet switches were up 4% to $1.19 billion. The 1997 forecast for ethernet switch sales was revised downward to $6.2 billion from a previous estimate of $7.3 billion.

3COM <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: COMS)") else Response.Write("(Nasdaq: COMS)") end if %> reported last week fourth-quarter earnings of $0.48 a share on sales of $829.9 million, in line with estimates and up moderately from the operating earnings of $0.46 a share on sales of $660.2 million in the comparable period a year earlier. On July 1, 3Com announced aggressive new prices by reducing the price of its industry-leading EtherLink III 10 Mbps ISA network interface cards by as much as 36%.

In-Stat, a market research firm, reports that 3Com had 57.9% market share in 10Mbps ethernet network interface card (NIC) shipments for the first quarter of this calendar year. In another study conducted by research firm Intelliquest, 3Com is the most frequently installed NIC and hub vendor among small businesses, a key, growing market segment for 10Mbps NICs.

Networking company CABLETRON SYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CS)") else Response.Write("(NYSE: CS)") end if %> reported Monday lower-than-expected first-quarter earnings of $0.38 a share, a penny ahead of the earnings a share reported in the comparable period a year earlier. Wall Street had been expecting earnings of $0.40 a share. Cabletron cites a larger-than-expected fall-off in demand for shared media and other mature products and said its European sales were substantially below target.

Ascend and Cascade Complete Merger

ASCEND COMMUNICATIONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ASND)") else Response.Write("(Nasdaq: ASND)") end if %> on June 30th announced the completion of its acquisition of Cascade Communications Corp. Cascade will no longer be traded on the Nasdaq stock exchange. Several former Cascade executives have joined the Ascend board of directors, bringing the total number of members to ten. The reorganization plan includes a reduction of approximately 250 employees.

Ascend is now organized into four business units. The Core Switching System encompasses the Cascade product line and it is notable that the Ascend GRF line of IP switches will also be included here. The Access and Concentrator Products division will cover the MAX family of remote access products, the Cascade RAS products will be discontinued. The Multimedia Access Products will offer the Multiband product family, the Remote Products business unit will include the Ascend Pipeline product family.

Combined second quarter earnings for Ascend and Cascade will be announced after the close of the financial markets on July 15, 1997. It is expected that the transaction will be non-dilutive to Ascend in the second half of 1997 and will be accretive in 1998. Ascend will report a one-time charge for the second quarter related to certain merger costs and related expenses.

America Online a Leader in Home Internet Access

AMERICA ONLINE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AOL)") else Response.Write("(NYSE: AOL)") end if %> is the leader in home Internet access, according to PCMeter, a "Neilson"-ratings type of company for the online world whose data is collected digitally via PCMeter software installed on the home PCs of 10,000 households (and 28,000 people) which are demographically balanced to represent the population of the United States. PCMeter measures interactive household usage of both the World Wide Web and online services.

According to the PCMeter report, measuring usage for April 1997, AOL is the indisputable #1 presence in cyberspace using several different yardsticks:

1. More than 55% of all household time spent on either the World Wide Web or on the proprietary areas of online services is spent with AOL. The other proprietary services -- Prodigy, CompuServe and MSN -- combined make up less than 6% of cyber-time; all other ISPs and websites combined add up to less than 40%.

2. AOL accounts for 38% of all traffic from the home to the Web.

3. AOL's features and areas are top rated, measured by the percentage of people in cyberspace who use the feature or visit the area.

Check Out The Networking Message Board

© Copyright 1995-2000, The Motley Fool. All rights reserved. This material is for personal use only. Republication and redissemination, including posting to news groups, is expressly prohibited without the prior written consent of The Motley Fool. The Motley Fool is a registered trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us