A few days ago I stumbled upon a report on Jeff Hawkes’ (of Sonic Management Group) blog about a near-taboo topic in telecom: the health of Avaya, and whether the business is spiraling toward implosion.
Surprisingly, I haven’t seen or heard much discussion in the telecom blogosphere and tweetverse about this report, which is a bit baffling considering the gigantic market share Avaya holds in the industry and the numerous analysts that cover every move about this company. At least there were several readers who chimed in with their own comments on Hawkes’ blog…
But in (bleak) summary:
- The company failed to earn a profit since 2007, the year of its leveraged buyout (LBO) by TPG and Silver Lake; losses were $1.3 billion in 2008, $845 million in 2009, $871 million in 2010, and $863 million in 2011 (from latest 10-K filing)
- $4 billion worth of equity destroyed from 2007 to 2010
- Long-term debt now at $6.1 billion
- Filed to IPO in June 2011 but yet to complete the transaction; hopes to raise $1 billion from 20% of the company
- Avaya may end up being the Eastman Kodak of the telecom industry
You simply cannot read the financial numbers about Avaya and not get a chill down your spine. Obviously many companies are struggling in this depressed economy, but in Avaya’s case the losses and debts are staggering, especially when the company counts TPG and Silver Lake as backers.
Dear Avaya, your brand may look mesmerizing in red but not your financials.
What do you think the future holds for Avaya? Definitely something to watch out for in the new year…