Saturday, 11 May 2019 09:29

Avaya says looking at potential buyout as 2Q2019 revenue dips

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Unified communications vendor Avaya has seen a dip in revenue during the second quarter of fiscal 2019, with the company saying it earned US$709 million, a fall of 3.9% from the first quarter, and adding that it was exploring a buyout.

The company had told investors in February that it expected revenue for the second quarter to be between US$730 million and US$760 million.

President and chief executive Jim Chirico said in a statement: "Following the receipt of expressions of interest, the company has engaged J.P. Morgan to assist in exploring strategic alternatives intended to maximise shareholder value.

"The board has not set a timetable for the process nor has it made any decisions related to any strategic alternatives at this time. There can be no assurance that the exploration of strategic alternatives will result in any particular outcome.

"The company does not intend to provide updates unless or until it determines that further disclosure is necessary."

In March, a report said that Avaya was trying to effect a leveraged buyout from a private equity company, with its value, inclusive of debt, estimated at about US$5 billion.

A Bloomberg report a month later said it was planning an auction, after it had received unsolicited offers from potential purchasers. A Wall Street Journal article the same month said Avaya was holding talks to join its rival Mitel Networks in a stock deal worth more than US$2 billion.

"Our topline results and earnings fell short of expectations," Chirico said. "In response, we have implemented a number of corrective actions to drive improved performance.

"While I'm disappointed in our results last quarter, overall, I remain confident about our path forward given the momentum and traction we are seeing in many segments of our business including cloud, services and emerging technologies."

Avaya entered the public market in January after it emerged from Chapter 11 bankruptcy.

The exit from Chapter 11, which Avaya moved into in January the same year, was effected at a time when it had about US$6 billion in debt which it planned to cut down to US$2.9 billion. The debt was a hangover from its previous leveraged buyout by private firms TPG Capital and Silver Lake who paid US$8.3 billion for the firm in 2007.

Avaya is a big provider of telephony systems. It was a part of Lucent Technologies and became a separate unit in 2000.

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Sam Varghese

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Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.

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