The 200 Best Small Companies in America: Work in Progress

Cabletron Systems Inc. started out in a garage in 1983. Since then, the manufacturer of local area network (LAN) equipment has grown into a $105-million (sales) operation that, in fiscal 1990, earned a remarkable $22 million. Its performance since 1985, with an average return on equity of 52%, has placed Cabletron in the number 2 spot on Forbes' 1990 list of the 200 Best Small Companies in America. However, as the rise and fall of dozens of computer companies in the early 1980s instructs, Cabletron's greatest challenge almost certainly lies ahead. The aggressive behavior of founders Craig Benson and Robert Levine has allowed Cabletron to ride the networking trend quite capably. Among the company's major customers are Harvard University, Boston University, and Shearson Lehman. Since 1985, the market for LAN equipment has grown from $300 million to an estimated $7 billion in 1990. Levine is counting heavily on management systems for token ring networks to propel the company's next stage of growth.