An experienced communications and telecommunications analyst compares what is happening currently Avaya Holdings Corporation Due to the eventual collapse of the Ottawa-based Nortel network in 2009.
John Arnold, Principal J Arnold & Associatesan independent research firm based in Toronto, said in a recent interview that the trajectory the Durham, NC organization is headed toward is “very similar to the one Nortel ended up with — it’s really supernatural. It’s financially Not as reckless, but he definitely has bigger issues that are going to put him behind the eight ball.”
Avaya, he said, has a short runway — two quarters at most — to turn its fortunes around, keep investors on board and maintain their confidence and “obviously the confidence of customers and channel partners” .
Should that not happen, he said, Avaya, a company that was formed in 2000 when Lucent Technologies sold its division that manufactured business telephone systems to Nortel, might “be broken into parts and Sold.”
When news of the organization’s serious financial problems appeared in the Wall Street Journal last month Reported that “the company is close to a Chapter 11 bankruptcy filing to restructure its balance sheet, transform its business and address past accounting problems.”
The company’s shares were trading till this afternoon US$0.18That compared to a high share price of US$21.65 at the start of last year.
Arnold, who attended an analyst briefing last month with Avaya CEO Alan Maserek, said the message that came out of this was that the company needed to reduce its product focus and focus on its contact-center-as-a-service. Intends to “double down”. (CCAAS) offer Avaya Experience Platform.
a company blog describes CCaaS as a cloud-based customer service application that manages and tracks customer journeys, staff interactions with customers, and many other inbound or outbound customer communications.
“CCaaS allows companies to purchase only the technology they need, and is typically operated by a single vendor, helping to reduce IT and administrative costs.”
If Maserek and Avaya board members submit Chapter 11 filings, it will be the second time in five years. “It’s very unusual,” Arnold said. “It will all depend on how much time the creditors give them. If they smell enough blood and realize it’s a sinking ship, they’re going to call in their loans and it will force the company to default, which you really don’t want to see.
“I can tell you that every analyst you talk to will say that the market is better because of Avaya being in the game, not because of their pedigree. If you go back to their roots, they are the founding companies of the entire telecom industry. But you know, Nortel thought she was too big to fail, but her arrogance ground her.
“Avaya is too humble. I think he doesn’t have many chips to play with at the moment, so he’ll have to do the right thing and keep his head straight.”
Meanwhile, in a Statement Regarding Avaya, released on December 23, research firm GlobalData said its new product strategy, spearheaded by recently founded Masrek, offers little differentiation compared to its predecessor and other major competitors.
The firm’s principal analyst, Greg Wilsky, said, “Some of the initiatives currently underway will bring greater clarity of purpose to customers and employees, and the company has an impressive set of assets.” Reminds me of CEO Jim Chirico as well as other legacy technology players like Cisco and Mitel.
“Avaya is trimming its product portfolio to better support its core mission of meeting customers throughout their cloud journey (on-premises, cloud, or hybrid) and migrating them at their own pace. “
Wilsky added that “fewer products mean fewer costs, less operational gymnastics and faster time to market. Avaya’s Experience Platform is a key driver of this product strategy. It is the engine that Avaya uses to deliver those propositions.” which it has decided to retain (mainly unified communications and collaboration), as well as the company has decided to invest in new investments (service and customer experience as a contact center).
However, working in Avaya’s favor, he said, is “a broad customer base of 90,000 organizations spread across 190 countries, a large partner ecosystem, one of the highest revenue bases in the industry, a large patent portfolio and deep brand recognition.” .
“If the new CEO can harness these assets, enforce greater transparency, credibility and clarity, and carve routes to market independent of his predecessor, Avaya will be on a promising path.”