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Avaya willing to share customers with Cisco, Microsoft in three-way networking battle

Tim Greene | April 1, 2013
Avaya CEO says company debt woes are under control

But with the advent of a new single-server phone system, IP Office, Avaya has started to come back. "...[T]he good news is we're on a new product cycle, and [IP Office] that is so competitive is one of the reasons that we're winning again."

Kennedy says that Avaya's recently restructured debt should keep the company clear of a cash crunch through 2017 at the earliest and enable it to continue updating its products.

The company owes $6.075 billion in long-term debt and scored an $85 million net loss during the last three months of 2012, according to the company's latest 10-Q report to the Security and Exchange Commission.

He says that despite the stark terms of the refinancing, customers shouldn't worry about its effects on actual products. "I would argue that through public information it is very clear that debt restructuring does not translate to an issue in product continuity. In fact it's quite the opposite because that's the only value to be protected," he says. "That being said, gross margin, the ability to service debt has improved over the last five years."

The company filed last June to sell public stock in the company but that initial public offering has stalled. He says he expected to seek an IPO in 2013, but the owners of the company, Silver Lake and TPG Capital, wanted to file earlier. "I think we filed in June and by August it had become a very dubious market and it was not optimum for us to go out," he says. "Again, owners will make those decisions. They're very clear for me to stay focused on improving the products, and that's what I do."

Meanwhile Avaya is benefitting from its 2009 purchase of Nortel's enterprise network infrastructure gear and its customers, he says. "We're taking over the management of their infrastructure directly. That's a recurring revenue stream that becomes new to us as we take those contracts," he says.

That infrastructure in combination with Avaya voice gear gives customers resources to debug networks that other vendors can't match, he says. Customers who have Nortel equipment and choose to upgrade to the next generation choose Avaya to manage the transition.

He says Avaya supports BYOD programs with its Flare collaboration/presence/email/voice client and one-X mobile voice client or iPhones and Android devices. In addition, the company activates two softphones on PCs for every phone handset it sells, a dramatic change from four or five years ago when most sales were for hard phones.

Avaya's Identity Engines portfolio also helps BYOD programs by setting aside virtual LANs for certain categories of users and making it easy for personally owned devices to access limited portions of corporate networks. "My real point is BYOD is not just a video or a unified communications client story it is also married into the ease with which we can help people do BYOD as an overlay into your networking environment," Kennedy says.

 

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