Networking's fires stoked

The pervasiveness of the Internet and the expanding requirements of corporate networks continue to fuel exponential growth in the networking industry.

Asynchronous transfer mode (ATM) kingpin Fore Systems (FORE) and remote access giant Ascend Communications (ASND) both announced huge growth in revenues and profit for their most recent quarters.

Fore reported a 76-percent increase in revenue and a 79 percent increase in profits for its fiscal 1997 third quarter compared to 1996 results, as the company continued to gain converts to ATM networking technology. Those figures slightly exceeded Wall Street expectations for its third quarter. The company reported revenues of $112.65 million for the quarter and profits of nearly $15.3 million, excluding costs for three acquisitions totaling $200 million during the period.

Earnings per share was 16 cents for the quarter before acquisition costs. Wall Street had expected Fore to report earnings of 15 cents per share for the quarter, according to First Call. Taking into account the spending spree, Fore's earnings totaled $12.8 million, or 13 cents per share.

Fore Systems is seen as a bellwether company for ATM technology, since no other company has placed its bets so squarely on the high-speed networking pipe for interconnecting multiple local area networks (LAN). ATM's penetration has fallen short of expectations because it has not been adopted as voraciously as expected in the LAN or to the desktop. But it remains a formidable pipe for the "backbone" of a network, interconnecting LAN's at several sites over a wide area network (WAN).

However, demand for remote-access gear surpassed Fore's strong results. Ascend closed out its fiscal year at the end of December by posting income of 32 cents per share, beating the estimates of the financial community, according to First Call. The company posted a 189 percent increase in sales, to $177.5 million, and a 205 percent increase in income, to $41.1 million, for its fourth quarter.

Ascend specializes in remote access gear for large networks, with a particularly strong presence in the Internet Service Provider (ISP) and telecommunications markets. For the year, the company posted a 260 percent increase in sales and a 311 percent increase in income. For fiscal 1996, the company recorded $113 million in income on nearly $550 million in sales.

Neither company stood pat during the quarter. Fore continued to show signs that it wants to become a one-stop shop for customers, as it acquired Fast Ethernet and Gigabit Ethernet switch provider Scalable Networks. The ATM stalwart also plucked ATM multimedia technology by adding Nemesys Research and addressed the Internet Service Provider (ISP) and telecommunications markets by acquiring Cadia Networks, which specializes in consolidating multiple types of network traffic over an ATM WAN link. Ascend purchased StonyBrook Services, a network management software company, after making three other acquisitions earlier in the year.