Avaya Explains Why They've Declared Bankruptcy (networkworld.com)

Friday Avaya's Corporate Treasurer explained why they're filing for a chapter 11 "restructuring." After examining their debt, "we decided it was a critical next step in our transformation from a hardware company to a software and services company and the best path forward for our customers, partners and employees." skidv writes: ZDNet breaks down the deal... "Avaya noted that its foreign affiliates aren't included in the filing and will operate as normal. Avaya said the $725 million in debtor-in-possession financing, via Citibank, is enough to minimize disruption and continue business operations." Not surprising, Avaya has canceled the planned IPO.
PC World reports that Avaya "emerged from Lucent Technologies in 2000 with a focus on phone switches, enterprise networking gear, and call-center systems. But with the shift toward mobile phones and cloud-based tools for communication, and a tight market for enterprise network equipment, the company has been changing its focus... Like much of the networking and collaboration industry, Avaya is looking toward software-defined networking, IoT, and cloud-based platforms that work on many different devices and the web."

Comments

The new "I got nothin'"

[BarbaraHudson]

Like much of the networking and collaboration industry, Avaya is looking toward software-defined networking, IoT, and cloud-based platforms that work on many different devices and the web."

So, you failed as a business at what you specialized at, and now you're going to "pivot" to a field that's already over-crowded with others who've failed and are making the same pivot.

A couple of years ago it was Apps Apps Apps. Now it's IoT IoT IoT. Sturgeon was an optimist.

Re:What is your opinion on call center software?

[torqer]

Everyone still needs someone to bitch at when equipment or services don't work. Call centers are still actually surprisingly profitable. There are great margins in a call center, and the CC business probably the only reason why Avaya is still afloat (And thus the reason they are not selling of the Call Center portion of their business to pay off the debtors).

Avaya provides and creates a lot more than just Call Recording Software. The real money is quickly turning in to multi channel delivery. Phone calls are still king, but being able to answer text, email and social is becoming increasingly important. Integration and reporting on the different delivery methods is definitely a growth market.

In terms of the different platforms: I've used many. Here's my general opinion

Avaya -- Good, has been expensive. Supports a lot of legacy equipment -- that's a blessing and a curse.
Cisco -- Not good for a call center, great for office environments
Open Source -- Freeswitch / Asterisk. You can certainly do a lot with them. But interoperability between systems, and support can be a problem.
Cloud based stuff -- Interactive Intelligence / Amazon ACD / etc. I would only use them for small deployments (less than 50 seats).

Translation

[Alain Williams]

Although we have lots of money and good prospects in our new products we don't want to pay our bills to our old suppliers. So we will shaft our old suppliers by getting out of paying them by using Chapter 11 financial magic. The following was not said: and management will be able to award itself bumper bonuses next year as a result.

Re:Translation

[Richard_at_work]

Chapter 11 really is an abusive mechanism responsible for shafting many many third parties while allowing the company that filed for Chapter 11 to essentially continue unharmed. In recent years it has been used in the US airline industry to get out of union contracts, dump unwanted long term aircraft leases (in several cases the lessor had to destroy the aircraft because it had been parked up by the airline for multiple years without inspection or maintenance, and thus was unable to be flown without significant investment), dump shareholders and yet the airlines were allowed to continue to operate without interruption, in many cases with the same management which took the company into Chapter 11.

Quite a few lessors won't do business with American airlines these days without a significant guarantee provided by a financial institute outside of US control.

Something's not right here

[rsilvergun]

Avaya is probably 40-50% of the business phones out there and probably 90% of the phones used in call centers. There's no way they shouldn't be profitable. Were they the victim of yet another leveraged buyout (think Bain Capital) scam?

Re:Something's not right here

[SlaveToTheGrind]

Avaya is probably 40-50% of the business phones out there and probably 90% of the phones used in call centers. There's no way they shouldn't be profitable.

And Vlasic had a huge percentage of the pickle market before it filed for bankruptcy. Market share by itself tells you nothing.

Avaya was sitting on $6 billion in debt and most recently reported $58 million in quarterly profits. Do the math.

Moody's downgraded them twice last year, from nearly the junkiest of junky junk to something a bit junkier.

The only surprising thing is that they held off the inevitable as long as they did.

Re:I suppose

[adolf]

Traditional pickles are fermented. Fermented pickles (fermented anything, really) is the stuff that keeps forever due to the lactic acid produced during fermentation.

The stuff Vlasic sells is "fresh pack," not fermented (as your sauerkraut was), using vinegar as a preservative. Totally different stuff...

That said: I've never thrown out pickles for "being old," even when I buy them in enormous containers.