Avaya helps to tie the corporate world together. The company's
communication equipment and software integrate voice and data
services for customers including large corporations, government
agencies, and small businesses. Its office phone systems
incorporate Internet protocol (IP) and Session Initiation protocol
(SIP) telephony, messaging, web access, and interactive voice
response. Avaya also offers a wide array of consulting,
integration, and other managed IT services. More than half of its
sales are in the US. In 2017 the company filed for Chapter 11
bankruptcy to deal with a heavy debt load.
Avaya filed for protection under Chapter 11 bankruptcy in
January 2017 as it sought to reduce its debt. The company took on
debt when it was acquired by Silver Lake Partners and TPG Capital
in 2007. At the time of the transaction, Avaya focused on providing
telecommunications hardware. Since then many of the tasks handled
through hardware have shifted to software, a trend that has had a
negative impact on networking hardware companies like Avaya. As a
result, Avaya has had increasing difficulty in meeting its debt
obligations. The company arranged $725 million in financing,
underwritten by Citibank, to get it through the bankruptcy
In April 2017 Avaya filed a restricting plan with the bankruptcy
court. The company would reduce its pre-filing debt by $4 billion
and secured creditors would own 100% of the company's shares,
according to the plan.
Avaya also agreed to sell its networking business to Extreme
Networks for about $100 million. The deal was expected to close by
the middle of 2017.
Avaya divides its operations across three segments. Two of the
segments -- Global Communications Solutions (GCS; about 40% of
sales) and Avaya Networking (about 5% of sales) -- make up the
company's Enterprise Collaboration Solutions product portfolio. The
third segment is Avaya Global Services (AGS; more than half of
GCS offers business collaboration and communications software
used to make IT infrastructure for communications contact centers.
Avaya Networking makes Ethernet switches, routers, a virtual
private network technology products, while AGS offers IT consulting
and advisement services.
Avaya operates through about 178 leased facilities and two owned
facilities spanning some 58 countries. It has 11 primary research
and development facilities in Canada, China, Germany, India,
Ireland, Israel, Italy, and the US.
Customers in the US buy 54% of Avaya's products, followed by
Europe with 26%, Asia-Pacific at 11%, and Canada and Latin America,
Sales and Marketing
About a quarter of Avaya's sales were made directly in 2015, and
the company's sales strategy has emphasized building its channel
partnerships. The company continues to offer traditional
communications equipment with an eye toward migrating legacy voice
network equipment to IP-based systems.
Avaya's revenue slide continued in 2015 (ended September),
dropping 7% to $4 billion. The company has lower sales through all
its market all geographic segments. Sales for its legacy product
continued to fall in 2015 while currency exchange rates also
While Avaya has lost money for nine out of the past 10 years it
has narrowed losses in the last two years. It reported a loss of
$144 million in 2015, compared to a $231 million loss in 2014.
Cash flow from operations rose to $215 million in 2015 from $40
million in 2014.
Avaya sold non-core businesses and released a steady stream of
products and services that expanded its cloud computing and mobile
The company sold its IT Professional Services business for $101
million as well as the Technology Business Unit (for $14 million),
which had been acquired with RADVISION Ltd.
In 2017 the company's recurring revenue, a key measure of
software-as-a-service, had increased to almost 60% of the total, a
high for the company. Revenue from software and services was about
80% of the total, another record for Avaya.
Should the company's bankruptcy plan be approved and
implemented, it should give Avaya room to maneuver by investing in
research and development in software and services as well as sales
and marketing efforts. The sale of its networking business would
provide an infusion of cash while divesting the unit with the
fastest decline in revenue.
Mergers and Acquisitions
Avaya boosted its cloud offerings, in part, through
acquisitions. In 2015, it bought Esna, a provider of cloud-based
unified communications. Esna operate as a wholly-owned Avaya
subsidiary. The move helps position Avaya as a provider of mobile
and cloud-centric collaboration technologies.
The company previously acquired IT Navigator Ltd., a global
provider of cloud, social media, and management products and
services. The integration of their portfolios enhanced Avaya's
cloud as well as its unified communication and contact center