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Cabletron Spinoff Parade Begins With Riverstone Filing

The hot Net equipment market will get a new pure-play entry.

Riverstone Networks

, a maker of communications equipment for the Internet, filed for a $200 million

IPO Monday, the first of

Cabletron Systems'

(CS) - Get Report

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

Enterasys Networks


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

Kaufman Brothers

, estimates that breaking out Riverstone will value it at $2 billion, according to the trading multiples of its competitors (

Extreme Networks

(EXTR) - Get Report


Foundry Networks


Alteon WebSystems



F5 Networks

(FFIV) - Get Report


Juniper Networks

(JNPR) - Get Report


TheStreet Recommends

Avici Systems


). 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






Tyco International's




. More are in the pipeline, including

MRV Communications'



, which filed for an IPO in July.

The lead manager of Riverstone's issue is to be

Morgan Stanley Dean Witter


Chase H&Q


Lehman Brothers


Salomon Smith Barney

are acting as co-managers.

Shares of Cabletron closed Monday trading at $32.25, down 75 cents.

As originally published, this story contained an error. Please see

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