A double buy for Cabletron

Struggling Cabletron Systems continues to fill holes in its product line through acquisitions, snapping up technologies from two firms that specialize in high-speed networks.

The networking equipment provider dished out $33.5 million for the communications systems group of remote access player Ariel, and another $25 million for FlowPoint.

The deals position Cabletron for entry into the emerging market for remote access equipment based on digital subscriber line (DSL) technology, offering home users a high-speed alternative that uses current telephone lines. The DSL equipment market in general is expected to balloon to $1.6 billion by the year 2001, according to International Data Corporation.

The Ariel deal will be a cash transaction. As for FlowPoint, Cabletron--which already owns an equity stake in FlowPoint--will purchase the remaining 65 percent of the company for cash or stock at its discretion.

Cabletron will acquire back-end devices intended for service providers that want to provision DSL-based services from Ariel and customer-premise hardware to facilitate connections from FlowPoint.

"We now have a current end-to-end solution that is shipping," said Eric Doricko, a service provider marketing executive at Cabletron. "We don't have to partner anymore."

Executives at Cabletron have made it clear that acquisition will be a primary method of restarting the company's growth over the next several quarters, as Cabletron attempts to recover from the first fiscal woes in its history. The company recently experienced a management upheaval that has left some observers wondering about its future.

Cabletron acquired start-up Yago Systems in January for more than $200 million in order to add routing functions to its switching-based focus.

In related news, Ariel announced that sales for its second fiscal quarter will be lower than expected.