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Profit Triples at Networking Firm Xylan

Technology: Broader client base brings better-than-expected results.

July 21, 1998| From Bloomberg News

Xylan Corp. said Monday that its second-quarter profit more than tripled as the Calabasas-based computer-networking company sold more of its sophisticated equipment to a broader range of customers.

Profit for the quarter was $9.6 million, or 20 cents a diluted share, compared with $3.1 million, or 7 cents, before a gain a year earlier. The company was expected to earn 19 cents a share, based on a poll by First Call Corp.

Xylan gets about 40% of its revenue from distribution agreements with IBM Corp. and French telecommunications giant Alcatel Alsthom, which sell Xylan's equipment to their corporate customers. The company also sold more of its newest product through other distributors and directly to customers.

"They put in a solid overall performance," said Marc Woodward, an analyst with Van Kasper & Co. in San Francisco.

Xylan's revenue rose 85%, to $83.7 million from $45.1 million a year ago. Sales of the company's new OmniStack switch, used to link computers in large corporate networks, doubled in the quarter, Chief Executive Steve Kim said.

In the year-ago quarter, Xylan had a gain of $4 million, or 8 cents a share, related to a tax benefit. Including the gain, the company had net income of $7.09 million, or 15 cents a diluted share. There were no gains or charges in the most recent quarter.

Xylan shares rose $2.44 to close at $31.06 on Nasdaq. The company reported its results after the close of regular U.S. trading.

At a Glance:

* Bay Networks Inc. reported a fiscal fourth-quarter profit in line with expectations as the No. 3 computer-networking company was hurt by stiff price competition and slowing sales of its older products.

The Santa Clara company said profit before a charge for the quarter ended June 27 was $27.6 million, or 12 cents a diluted share, compared with profit before charges of $30.5 million, or 15 cents, a year earlier. The company had been expected to earn 12 cents a share. Revenue rose 13.8%, to $618.3 million from $543.0 million a year ago.

Last month, Bay agreed to be bought by Northern Telecom of Canada for $38 a share after struggling in the March quarter. Bay has had to cut prices on the equipment it sells to corporate customers amid stiff competition from rivals Cisco Systems Inc. and 3Com Corp..

* Santa Clara-based Network Associates' second-quarter earnings rose 75%, beating analysts' expectations, buoyed by strong sales of its security and anti-virus software.

Network Associates' profit was $72 million, or 41 cents a diluted share, excluding acquisition-related charges, compared with $41.1 million, or 25 cents, in the year-earlier period.

Revenue rose 39%, to $212.5 million from $152.8 million. The results reflect a 3-for-2 stock split May 29.

* Metacreations Corp., the Carpinteria-based designer of graphics software, reported a second-quarter loss of $12.4 million, including a charge, or 52 cents per share, compared with a loss of $12.4 million, or 54 cents, a year ago that also included a charge. Revenue was $8 million, versus $18.7 million a year ago.

* Thousand Oaks-based Xircom Inc. reported fiscal third-quarter income from continuing operations of $4.5 million, or 20 cents a share, compared with $422,000, or 2 cents, a year earlier. Revenue was $71.3 million, compared with $50.2 million a year ago.

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