Bay Networks Profit Off 74% Despite Revamp

Bay Networks Inc. said Tuesday that its fiscal second-quarter profit from operations fell 74%, the fourth straight quarter the computer networking company’s results have fallen below Wall Street forecasts.

The Santa Clara-based company said profit from operations for the quarter ended Dec. 31 fell to $19.2 million, or 10 cents a share, from $72.9 million, or 38 cents, from the year-earlier period. Pretax charges totaling $207.2 million resulted in a bottom-line loss of $172.9 million, or 90 cents a share.

Analysts had expected earnings of 23 cents a share, excluding charges, based on the average estimate of analysts.

The results fell short of expectations, though the company took action to revamp its operations to catch faster-growing rivals such as 3Com Corp. and Cisco Systems Inc.

“Everybody knows that it hasn’t turned around yet,” said analyst Martin Pyykkonen at Furman Selz.

Analysts said Bay Networks was slow to make the transition last year to switches from hubs, which had been its main product. Both are used to help transmit data within a computer network.

In October, Bay hired Intel Corp. veteran David House as chairman, president and CEO, replacing co-founder Andrew Ludwick, who resigned as the company’s sales growth stalled.