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Avaya Explores Potential Company Sale (Again)

Jim Chirico

Avaya CEO Jim Chirico

Avaya has hired J.P. Morgan to explore “strategic alternatives intended to maximize shareholder value,” according to CEO and President Jim Chirico. Read between the lines, and Avaya is seeking bids for the communications and collaboration company after receiving some inquiries.

Update, September 12, 2019: Avaya statement on potential company sale.

Rumors about Avaya being up for sale have swirled throughout 2019. Potential Avaya bidders may include private equity firms Apollo Global Management LLC, Permira Holdings and Searchlight Capital Partners, according to an April Bloomberg report. And in March, the company was considering a potential $5 billion company sale, Reuters said at the time.

Fast forward to Avaya’s May 9 earnings statement, and Chirico seems to be signaling another call for bidders or next step in the potential sale process.

Avaya Pursues Potential Buyers

In a prepared statement, Chirico said:

“Following the receipt of expressions of interest, the Company has engaged J.P. Morgan to assist in exploring strategic alternatives intended to maximize 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.”

Avaya has evolved from a hardware provider into a cloud-centric communications provider over the past decade. But the journey hasn’t been easy. After stumbling under previous owners, the company emerged from Chapter 11 bankruptcy protection in December 2017 with hits partner strategy intact.

Fast forward to present day, and growth remains a challenge for the company. For its second quarter of fiscal 2019 ended March 31, 2019:

  • GAAP revenue was $709 million, down $37 million from the corresponding quarter last year.
  • GAAP net loss was $13 million, compared to GAAP net income of $9 million in the first quarter of fiscal 2019.

Avaya Misses Financial Expectations

Chirico conceded the company’s ongoing challenges, stating:

“Our topline results and earnings fell short of expectations. 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 typically holds its major partner and customer conference in Q1 of each year. The Avaya Engage 2020 conference is scheduled for February in Phoenix.

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