FOOL PLATE SPECIAL
An Investment Opinion by Randy Befumo

Cabletron Clotheslined

CABLETRON SYSTEMS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CS)") else Response.Write("(NYSE: CS)") end if %> plunged $15 3/8 to $30 3/8 this morning after the manufacturer of networking equipment warned it would not meet first quarter expectations. News of this disappointment sent networking-related shares reeling in sympathy. The Rochester, New Hampshire-based concern will report earnings well below consensus estimates analysts had been forecasting, causing many of them to re-evaluate their ratings on Cabletron this morning. Management at Cabletron is at a loss to explain why its performance was such a complete bust, although management did hold a conference call for analysts this morning.

This disappointment at Cabletron comes only weeks after Wall Street had managed to develop renewed confidence in the industry after 3COM <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: COMS)") else Response.Write("(Nasdaq: COMS)") end if %> led the group lower throughout the first quarter. Price cuts from Intel in February and again in April caused many analysts to conclude that 3Com's substantial network interface card (NIC) business was about to become Intel roadkill. Networking-related shares plunged in sympathy with 3Com as investors became increasingly concerned about the vitality of the group, particularly after comments by some industry executives that implied corporate sales were weakening in the first quarter.

Cabletron believes it will meet or slightly exceed first quarter earnings of $0.37 per share, compared to consensus estimates of the $0.50 per share. Revenues will come in at $360 to $370 million, only 11% to 14% higher than the $324 million that the company booked last year. The company stated that revenues from shared media products (hubs) and some other "mature" products were soft in the quarter. European sales were also well below internal targets, perhaps exacerbated by production delays for Cabletron's new SmartSwitch 6000 product. The unexpectedly weak revenues came in spite of a strong sales effort by the company, meaning the additional spending for sales will decrease margins. This sort of bad news leading into next quarter, the traditionally the company's weakest, is apparently enough to make many decide that the shares are not worth owning -- ironic considering that until yesterday Cabletron was the only member of the networking group within a few percent of its 52-week high.

[RELEVANT MESSAGE BOARDS: 3Com Corp. (COMS) * Ascend Comm. (ASND) * Cabletron Systems (CS) * Cascade Comm. (CSCC) * Cisco Systems (CSCO) * U.S. Robotics (USRX)]

UPS

ORTHOFIX INTERNATIONAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: OFIXF)") else Response.Write("(Nasdaq: OFIXF)") end if %> gained $1 9/32 to $10 11/32 after the medical device company was awarded $150 million in damages in a lawsuit against its former distributor for breach of contract, tortious interference, and trademark infringement, among other things.

Telecom equipment manufacturer ORTEL CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ORTL)") else Response.Write("(Nasdaq: ORTL)") end if %> jumped $2 3/8 to $15 3/4 after last night reporting Q4 earnings per share (EPS) of $0.19, beating estimates of $0.14, on a 39% increase in revenues of $21.5 million.

FAULDING INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: FAUL)") else Response.Write("(Nasdaq: FAUL)") end if %> moved up $1 7/16 to $12 3/16 after the U.S. subsidiary of the Australian generic drug maker agreed to merge with its parent in a $12 per share cash offer.

Having appeared in Investor's Business Daily's "New America" section, encryption semiconductor maker TRANSCRYPT INTERNATIONAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TRII)") else Response.Write("(Nasdaq: TRII)") end if %> gained $1 1/4 to $12 7/8 this morning.

CATALYTICA INC. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CTAL)") else Response.Write("(Nasdaq: CTAL)") end if %> tacked on another $1 to $11 3/4 after yesterday's move on speculation that it will present study results on a system to reduce gas turbine engine emissions. Today the company's stock is moving on initiation of coverage at Lehman Brothers, which rated the company "venture one."

TITAN HOLDINGS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TH)") else Response.Write("(NYSE: TH)") end if %> rose $3 1/8 to $22 1/2 after the property & casualty insurance company said it has retained investment advisor Furman Selz to help it assess offers Titan has received about a buyout or sale of business units.

DOWNS

SEAGATE TECHNOLOGY <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SEG)") else Response.Write("(NYSE: SEG)") end if %> fell $3 to $39 3/8 after pre-announcing a 6% to 10% sequential decline in quarterly revenues. The company said gross profit would remain stable but operating EPS would fall below last quarter's $1.01, which is not really a surprise given the seasonal nature of the business.

WESTERN DIGITAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: WDC)") else Response.Write("(NYSE: WDC)") end if %> investors took down that stock $2 to $56 3/8 on Seagate's news, while disk drive industry supplier and flexible circuit maker FLEXTRONICS INTERNATIONAL <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: FLEXF)") else Response.Write("(Nasdaq: FLEXF)") end if %> lost $3 3/8 to $20, and ADFLEX SOLUTIONS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AFLX)") else Response.Write("(Nasdaq: AFLX)") end if %> declined $1 3/8 to $14 3/4.

Computer consulting company ACCELR8 TECHNOLOGY CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ACLY)") else Response.Write("(Nasdaq: ACLY)") end if %> lost $1 to $16 despite announcing a contract to do a $1.5 million+ year 2000 assessment for a large tobacco company.

Cabletron's earnings pre-announcement cast a pall over the rest of the networking sector today, even as assumptions regarding the monolithic nature of the industry are often mistaken. Nonetheless, ASCEND <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ASND)") else Response.Write("(Nasdaq: ASND)") end if %> lost $3 1/8 to $52, U.S. ROBOTICS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: USRX)") else Response.Write("(Nasdaq: USRX)") end if %> fell $4 1/16 to $81 1/8, and merger partner 3COM <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: COMS)") else Response.Write("(Nasdaq: COMS)") end if %> fell $2 7/16 to $46 5/8. Switching products vendor BAY NETWORKS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BAY)") else Response.Write("(NYSE: BAY)") end if %> slid $1 5/8 to $22 3/4.

MICRON TECHNOLOGY <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MU)") else Response.Write("(NYSE: MU)") end if %> slipped $1 3/4 to $42 1/8 as it continues to ride the waves of speculation about a deal to sell its PC and contract manufacturing subsidiary, MICRON ELECTRONICS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MUEI)") else Response.Write("(Nasdaq: MUEI)") end if %>, to COMPAQ COMPUTER <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CPQ)") else Response.Write("(NYSE: CPQ)") end if %>.

CONFERENCE CALLS

ORTEL CORP. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ORTL)") else Response.Write("(Nasdaq: ORTL)") end if %>
(402) 220-5186 -- replay available for 7 days

THIS WEEK'S CONFERENCE CALL SYNOPSES

NOVELL <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NOVL)") else Response.Write("(Nasdaq: NOVL)") end if %> Q2 Call
CIRCUS CIRCUS <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CIR)") else Response.Write("(NYSE: CIR)") end if %> Q1 Call

FOOL PORTFOLIO                  BORING PORTFOLIO

ATCT up $1/2 at $5 1/2          ATLS up $5/8 at $29
AOL down $1 1/2 at $57 1/8      BGP up $3/4 at $23 3/4
CHV up $1 at $71 1/8            CSL unch. at $30 1/2
COMS down $2 1/4 at $46 13/16   CSCO down $2 1/16 at $65 3/4
DJT unch. at $9 5/8             GNT unch. at $35 3/4
GM unch. at $56 5/8             ORCL down $7/8 at $48 1/8
IOM up $1/4 at $19              OXHP up $1 3/8 at $73 1/2
KLAC down $1/8 at $48           PMSI down $1/8 at $11 3/8
LU down $1 at $63               TDW up $5/8 at $44 3/4
MMM up $5/8 at $91 1/2
T up $3/8 at $36

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Randy Befumo (TMF Templr), a Fool
Fool Plate Special

Dale Wettlaufer (TMF Ralegh), another Fool
Ups & Downs

Brian Bauer (TMF Hoops), and yet another Fool
Editing