Avaya Board “Removes” CEO, Cuts Costs After Big Revenue, Earnings Shortfall

Avaya’s board of directors has “removed” James Chirico from his role as president and CEO, and named Vonage veteran Alan Masarek to succeed him, according to an Avaya SEC filing. The surprise CEO change comes amid a major revenue and earnings shortfall at the unified communications as a service (UCaaS) and contact center technology company.

For the third quarter ended June 30, 2022, Avaya said:

  • Revenue will likely be between $575 million and $580 million — far lower than the company’s original guidance $685 million to $700 million.
  • Adjusted EBITDA will likely be between $50 million and $55 million, compared to previous guidance of $140 million to $150 million.

Avaya’s stock fell about 50% on the news.

Avaya Cost Cuts: Layoffs Involved?

Amid those revenue and earnings shortfalls, Avaya plans to cut its annual costs by about $225 million to $250 million, the company said. Avaya did not specifically mention layoffs or staff cuts — but we suspect the cost-cutting efforts involve headcount reductions. Avaya has 14,550 employees listed on LinkedIn as of July 29, 2022.

We’ve reached out to the company for specific details about the financial plan.

Avaya has attempted to reinvent its business multiple times in recent years, but the results have been mixed to poor. The efforts have involved a partnership with RingCentral, as well as exploratory attempts to sell the overall business.

Despite the business turbulence, Avaya has continued to serve more than 100,000 customers and over 100 million unified communications lines worldwide. The company’s global business reach includes more than 8,000 channel partners and agents.

New Avaya CEO: Vonage and Google Experience

New CEO Alan Masarek most recently was CEO of Vonage. Earlier, he was director of Chrome & Apps at Google.

Masarek’s employment agreement includes a $4 million sign-on bonus, a base annual salary of $1 million and a 150% target annual bonus.

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