News out of the Wall Street Journal has Avaya contemplating a Chapter 11 bankruptcy filing and selling off its call center unit.
The problem with Avaya is it is over-leveraged, which we will be saying about many telecom companies in the coming two years. The on-premise or hardware PBX business did not fold like everyone thought. However, it didn't grow either. It slowly declined at about 3% per year.
Before its user conference, Broadsoft announced that it had hit 15 million licenses. According to Elka Popova, "The BroadSoft installed base is hosted IP telephony seats, fully-loaded UCaaS seats and business VoIP lines." So that just means licenses - even for SIP Trunks. About 3 million of those belong to Windstream and XO (1 million and 2 million SIP trunks respectively.) Who knows how many actual hosted seats there are.
Cisco has one-third that. Office365 is at 70 million users. All of that eats into, not just Avaya, but everyone.
Avaya's transition to cloud was slow and clunky. Mitel wasn't smoother but it was faster. It looked like the hardware folks - Zultys, Mitel, Avaya, NEC, Siemens, ININ - were content to keep on trucking. They treated Hosted PBX much like MSO's treat cord-cutting - deny, deny, deny - until it bites you in the ass! Then you get the lawyers, bankers and start filing BK.
"Spun off from Lucent Technologies in 2000, Avaya was a publicly traded company until 2007, when it was taken private by Silver Lake Partners and TPG Capital for more than $8 billion." [source] $8 Billion about 9 years ago. In the meantime, they did acquire a few companies, including some Nortel assets.
Channele2e reports, "software and cloud revenues aren't growing quickly enough to offset falling hardware revenues. Total Q2 revenue was $904 million, down $54 million compared to the prior quarter, and down $91 million year-over-year, as demand for unified communications products continued to contract, Avaya said."
They have been talking about an IPO or spinning off Zang or selling off a division like Networking or Call Center. We'll see what happens.