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Addressing Gartner's Impact Appraisal Report on Avaya Debt Restructuring

Blog Article  |  Posted by Melissa Burns  |  Mar 14, 2017



The purpose of this article is to help dismantle any concern or hesitation towards investing in or continuing with Avaya products and services in response to its Chapter 11 filing on January 19th, 2017. If you have any questions, comments, or concerns about investing in or continuing with Avaya products and services, speak with an MVDconnect representative today! Contact us, call (888) 843-1683, or email marketing@mvdconnect.com.

Recently, Gartner had published an "Impact Appraisal" report for their clients to provide "risk mitigation" advice regarding Avaya's Chapter 11 Debt Restructuring filing on January 19th, 2017. Gartner, an information technology research and advisory company, commonly publishes advisories like this one for their clients regarding companies that have filed for Chapter 11 restructurings.

The advice that Gartner has given their clients has caused many Avaya customers to have concerns about Avaya's financial situation and the future of the business. However, it also notes positive points regarding the significant steps that Avaya is making in its debt restructuring process and its viability in the future.

What you should know:

  • Gartner's recommendations are opinions only. Gartner's opinions are conservative in assuming Avaya's Debt Restructuring could last up to two years. Avaya has stated that it is its goal to exit this process during the third quarter of the 2017 calendar year.
  • Many analysts are optimistic of Avaya's future. Read Frost & Sullivan analyst Nancy Jamison's blog, I'm excited for Avaya's Future and Its Partners Think it will be a Breeze (Avaya Breeze enables you to integrate your existing or new applications with Avaya's unified communications technology and contact center capabilities including voice, video, text, and email) and Jon Arnold's online UC strategies article.
  • Avaya's operating model continues to be strong.
    • Revenue $875 million in Q1, at the high-end of preliminary results
    • Non-GAAP gross margins 61.5%, a first fiscal quarter company record
    • Non-GAAP operating income $187 million or 21.4% of revenue, a record percentage of revenue for an Avaya first fiscal year
    • Adjusted EBITDA up $10 million year-over-year to $238 million or 27.2% of revenue, a record percentage of revenue for an Avaya first fiscal quarter
  • Revenue is growing.
    • Networking product revenue up 20% year-over-year (YoY)
    • Professional Services (APS) revenue growth of 3% quarter on quarter
    • Cloud and Managed Services revenue up 1% YoY
  • There is adequate financing in place to continue normal business operations during Avaya's debt restructuring.
  • Customers are continuing to invest and buy from Avaya. More than 2,000 customers and partners attended the sold-out Avaya Engage event in Las Vegas.
  • Avaya is continuing to innovate and launch new solutions, and partner with other industry leaders. In 2016, Avaya launched 16 major new products and solutions and is continuing in 2017 with the launch of Zang Office and Zang Spaces, Avaya Surge, Avaya Equinox, Avaya Oceana, and many more.
  • Support Services are helping customers efficiently and cost-effectively get the most from their Avaya solutions. Customer satisfaction is at an all-time high of 94.5% of customers rating their interactions with Avaya in the good, very good, or excellent categories.

What the Gartner Impact Appraisal report stated (source: Gartner):

  • Avaya has been performing healthily in terms of products and services, reinforcing long-term viability.
  • Gartner sees Avaya's Unified Communication Center (UCC) and Common Caller Interface (CCI) as feasible operations in the near term.
  • Gartner believes Avaya has strong recurring revenue and expects it to rise with a stronger operating position (including its balance sheet) and will be able to finance growth and acquisitions.
  • Avaya customers and prospects should consider:
    • Adopting new strategies to minimize service disruption, protect long-term investments, and evaluate their vendor selection process.
    • Negotiating maintenance contracts with shorter terms.
    • Examining upgrades (major and/or unavoidable), investments, and expansions until Avaya shows a clear path out of its bankruptcy.

If you have any questions, comments, or concerns about investing in or continuing with Avaya products and services, speak with an MVDconnect representative today! Contact us, call (888) 843-1683, or email marketing@mvdconnect.com.


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AUTHOR
Melissa Burns

As the Marketing and Social Media Coordinator, Melissa works to grow and develop the customer base of MVDconnect with a fresh and creative perspective. She helps maintain the company's online presence with social media platforms and blogging. Additionally, she creates marketing strategies that differentiate MVDconnect from competition.