Enterasys, Back from the Brink, Blocks Bad Behavior on Wireless Networks
Last summer system administrators at Duke University in North Carolina noticed a rash of failures across the campus Wi-Fi network. Logs pointed to a storm of requests for Internet connections—up to 18,000 per second—from the nifty new iPhones that students were toting onto campus (Apple had released the device just two weeks earlier). In press reports, Duke’s IT managers warned that the iPhone threatened to bring down other campus wireless networks. But a few days later, they had to go back to the media to report that the apparent “storms” were actually Cisco Systems’ fault—the product of a bug in the way the campus’s Cisco network controllers were handling the devices’ Internet address requests.
Though the transfer of egg from Apple’s face to Cisco’s amused iPhone fans, the larger point of the story is that managers of Wi-Fi networks on large academic and corporate campuses have a lot to contend with these days. Trent Waterhouse, vice president of marketing at Andover, MA-based Enterasys, likes to repeat the Duke story because nearby UNC Chapel Hill, which owns Enterasys network controllers, rode out the alleged iPhone onslaught just fine—as did most other campuses. With so many people bringing so many new types of wireless devices onto campuses, Waterhouse says there’s a need for a smarter approach to network access control—which happens to be Enterasys’s business. “Even if the iPhones hadn’t been behaving the way they were supposed to, we would have prevented that from affecting the network,” he says.
Enterasys itself has weathered a few storms over the past few years. It’s one of four companies spun off in 2000 by Cabletron Systems, a supplier of networking cables and equipment that was for a time one of the largest employers in New Hampshire. It went public in a modestly successful IPO in August 2001, only to confront an almost immediate SEC investigation over questionable revenue booking practices in its Asia-Pacific division. The company was also hit by a steep dropoff in sales of its network control hardware, part of the downturn that affected the whole telecommunications business after the dot-com crash.
The firm’s stock value slid by 90 percent over in the first year after the IPO, foreshadowing a long period of restructuring marked by the departure of the CEO and other top executives, the layoffs of 1,700 employees (nearly a third of the company’s workforce), and, in 2003, a $50 million payout to settle a class-action shareholder lawsuit over the accounting problems. The same year, the company closed its Rochester, NH, headquarters and moved to Andover. In late 2005, it announced that it was going private, accepting a $386 million takeover offer from The Gores Group of Los Angeles and Tennenbaum Capital Partners of Santa Monica, CA.
With costs under control and revenues creeping upward again, the company reports it’s had nine straight quarters of operating profits (excluding charges related to the takeover). The company’s “inconsistent financial performance,” “ineffective marketing,” and “unclear product roadmap” prior to the takeover (to use the words of Enterasys’s own company newsletter) have now been replaced (according to the same newsletter) by … Next Page »