, a maker of communications equipment for the Internet, filed for a $200 million
IPO Monday, the first of
proposed spinoffs to do so.
Back in February, Cabletron announced it would form four independent operating companies, with Riverstone capturing the hottest segment of the business. The other three are
Global Network Technology Services
Aprisma Management Technologies
There is a fair amount of disagreement over the wisdom of that plan. Critics contend that Cabletron, based in Rochester, N.H., has been plagued by an inability to execute in a hot market and that the raft of spinoffs will not change such mismanagement.
However, the company bets that the new stand-alone entities will garner proper valuations. Clifton Gray, the data networking equipment analyst at
, estimates that breaking out Riverstone will value it at $2 billion, according to the trading multiples of its competitors (
). He rates Cabletron a buy, and his firm has done no recent underwriting for the company.
In addition, "investors hate diversity. They like to jump on pure-plays," says George Nichols, a stock analyst at
The year has already seen a couple of prominent spinoffs, such as
. More are in the pipeline, including
, which filed for an IPO in July.
The lead manager of Riverstone's issue is to be
Morgan Stanley Dean Witter
Salomon Smith Barney
are acting as co-managers.
Shares of Cabletron closed Monday trading at $32.25, down 75 cents.
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