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Avaya Inc.
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About Avaya Inc.

Avaya provides software and equipment for contact centers, unified communications, and workflow automation. The company’s software, offered via the cloud, and hardware products provide workers with one place for communicating with colleagues and customers. Avaya’s customers range from small and medium-sized businesses and organizations to Fortune 100 companies in financial services, hospital, government, and other industries. More than half of its sales are to customers in the US. A descendant company of the old AT&T, Avaya still sells phones, but has shifted to sell mostly software and services. The company reduced a heavy debt load through Chapter 11 bankruptcy from which it emerged in 2017.

Bankruptcy

Avaya emerged from Chapter 11 bankruptcy in December 2017, with a debt lighter by $3 billion, as well as fewer other long-term debt obligations. The resulting increase in cash flow should allow the company to become more flexible in researching and introducing more products and services. As part of the bankruptcy restructuring, Avaya got new executive leadership and a new board of directors. Further, the company sold its networking business to Extreme Networks for about $1 billion in 2017.

Operations

Avaya operates in two segments, Product & Solutions, more than 40% of revenue, and Services, about 60% of revenue. Products & Solutions includes the company’s contact center and unified communications products and its collaboration software and hardware products. Those services are delivered through a hybrid cloud environment.

Services provides professional and support services designed to help customers use Avaya’s products. Services include support for implementation, deployment, training, monitoring, troubleshooting, and optimization. It also includes the company’s private cloud and managed services. Most of Services revenue is recurring and based on multi-year services contracts.

The company’s Avaya Breeze Application Development Platform allows customers and third parties to adapt and program Avaya’s products for their needs.

The company’s handsets and video conferencing equipment are made by third-party contractors around the world.

Geographic Reach

Avaya is based in Santa Clara, California and has operations in about 60 countries. It has about a dozen research and development facilities in Canada, China, Germany, India, Ireland, Israel, Italy, and the US.

About 55% of Avaya’s sales are in the US with about 25% in Europe. The America’s outside the US and the Asia/Pacific region each account for about 10%.

Sales and Marketing

About 70% of Avaya’s sales are brokered through its 4,700 channel partners while its direct sales staff is responsible for the remaining sales. The company’s customers are in financial services, manufacturing, retail, transportation, energy, media and communications, hospitality, health care, education, and government. Some members of it roster of customers are Telekom Serbia, the State of Montana, Valrhona, Xiaomi, and the New York Mets.

Financial Performance

Avaya’s had a rough time financially in recent years. Revenue stood at $5.5 billion in 2011, but tumbled, year by year, to $3.3 billion in 2017 (ended September), with a stop in Chapter 11 bankruptcy along the way. Until 2018, the company hasn’t posted a profit since 2006.

In 2018 (ended September), revenue dropped to $2.8 billion from about $3.3 billion in 2017, due to the recognition of deferred revenue related to the bankruptcy. Other factors were the sale of the company’s networking business in 2017 and lower demand for unified communications products and maintenance services. Avaya did report higher contact center professional services sales and revenue from the Spoken acquisition in 2018.

Avaya’s net income of about $3.4 billion in 2018 came from the emergence from bankruptcy and the consummation of the subsequent reorganization.

Despite the big bottom line figure, Avaya had negative cash flow in 2018. Cash and equivalents in the company’s coffers stood at about $700 million in 2018, down $176 million from 2017. Cash outflow from operations totaled $212 million in 2018 and investing activities used $126 million while financing activities provided $171 million.

Strategy

In emerging from bankruptcy with $3 billion less debt on its books, Avaya believes it has the flexibility and resources to complete its hardware-to-software transformation. The reduction of debt and other long-term obligations should improve annual cash flow. The company installed a new board of directors and executive team to steer the process.

Even after emerging from bankruptcy, Avaya remained one of the biggest providers of contact center and unified communications tools (it has more than 145 million seats installed). One aim, at it gathers itself, is to make sure that current customers are happy by ensuring performance of current systems and developing better versions. The company is developing more cloud capabilities including the ability to use Amazon Web Services and Google web services.

Avaya also is integrating artificial intelligence capabilities, chatbot and virtual assistance, and mobility into its products, as well as provide a strong security element. That will help it expand into working with service providers and systems integrators to develop new markets.

Mergers and Acquisitions

Avaya acquired Spoken Communications, a developer of cloud-based contact center tools using artificial intelligence, for $172 million. Avaya integrated Spoken technologies in its offerings.

Avaya Inc.

4655 GREAT AMERICA PKWY
Santa Clara, CA 95054-1236
Phone: 1 (908) 953-6000

Stats

Employer Type: Privately Owned
CEO: James M. Chirico
SVP and CFO: Patrick J. O?Malley
Chairman: William D. Watkins
Employees (This Location): 148
Employees (All Locations): 11,701

Major Office Locations

Santa Clara, CA

Other Locations

Irvine, CA
San Francisco, CA
Sherman Oaks, CA
Simi Valley, CA
Denver, CO
Greeley, CO
Highlands Ranch, CO
Superior, CO
North Haven, CT
Bonita Springs, FL
Doral, FL
Fort Lauderdale, FL
Cary, IL
Schaumburg, IL
Newport, KY
Billerica, MA
Salisbury, MD
Durham, NC
Basking Ridge, NJ
Lincroft, NJ
Manchester, NJ
Amityville, NY
Depew, NY
Huntington, NY
Melville, NY
New York, NY
Worthington, OH
Oklahoma City, OK
Lake Oswego, OR
Greenville, SC
Sioux Falls, SD
Coppell, TX
Denton, TX
Herndon, VA
Bellevue, WA