Good Vibrations at Avaya

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While in Santa Clara for the recent Wainhouse UCC Summit, I managed to connect with some peeps at Avaya World Headquarters, and was pleasantly surprised with the vibe. Good Vibrations.

Avaya’s had a tough run – they were behind the eight-ball on the shifts from hardware to software, from software to virtualization, and product to cloud services. It paid way too much for Nortel, and despite their Olympian efforts, few will travel the short path to try their network solutions.

A ship that size doesn’t turn quickly – but it is turning. They haven’t yet hired a Bay Area AR lead, so I had to perform stealth reconnaissance. Here’s what I found.

  • CEO Kennedy is pulling off quite a feat – morale is up (despite ongoing losses during the transition), the operation is streamlined with lots of new young-talent, he’s done well protecting the base – particularly with contact centers and customer confidence is returning.
  • Part of the effort involved an all new leadership team (below the CEO). Avaya is now a California company and enjoying the fast-pace of Silicon Valley. Avaya was also smart enough to keep its development talent far from the valley recruiters (development is mostly in Denver, Israel, India). The leadership team has lots of new execs from Cisco. The company, which is sorta over a 100 years old, is getting younger.
  • That point about customer confidence above is important because it wasn’t long ago that Avaya had some major quality issues – not to mention its recent court loss regarding its maintenance practices.
  • The portfolio is undergoing major changes – and although few of these have been announced yet, the company is making significant progress on getting its clients sorted. The new clients will be based on the Radvision Scopia client – Flare burned-out and ONE-X was eX’d.
  • Key behind getting the clients sorted was restructuring the organization. R&D is now combined for Contact Center, UC, and Video combined and reports up to Gary Barnett along with Product Management.
  • The new CMO is obviously persuasive as she sold Kennedy on a part time position. A part time CMO at a $4.7B technology firm? Avaya’s been losing its presence in the market, but it sounds as though the products are coming together. (At Wainhouse, Bill and I predicted Avaya is one of 3 major UC vendors we expect to decline in presence over next five years). The good news for CMO Andy is her top competitor Microsoft doesn’t seem too concerned with Avaya – Sooomething is distracting them.

Second quarter results compared to last year are mixed:

  • Total Revenue: $1.06B DOWN
  • Operating Income DOWN
  • Adjusted EBITDA UP
  • Cash UP

The big question is what to do about all that debt. Evidently, something is afoot (thanks @Brian_Riggs). Avaya bonds are up in trading., andAvaya is considering some strategic options according to company spokeswoman Deb Kline. “These could include sales of nonstrategic assets, outsourcing arrangements, and other divestitures.”

These events got me thinking about a potential reversal in fortune between Avaya and Cisco. It’s a leap considering neither company has made any major announcements in UC lately – but Avaya seems to be making progress and Cisco seems distracted with video and IoT.

 

Dave Michels