Avaya, a giant in the telecommunications technology industry and a player in the call center industry, has filed for a $1 billion initial public offering. This would value the company at $5 billion or more.

The company has its origin in Lucent Technologies, which spun off Avaya in 2000. In somewhat recent history, Avaya closed a deal for Nortel’s enterprise unit in September 2009, paying $915 million to acquire the business. The IPO would more than pay for the amount Avaya paid for the Nortel unit.

No stranger to the public domain, private investment firms Silver Lake Partners and TPG Inc purchased Avaya in 2007. The Avaya strategy pursued by the firms seems to have been focused on repositioning. Avaya has had to develop quickly to adapt to the quickly changing business telephony market as cloud services and digital platforms surge in popularity. Avaya is introducing over 30 products this year, showing the lightning pace of innovation the company has been forced to work at. Ross Pellizzari, Avaya’s Canadian president, has commented on the way Avaya is headed:

“Every day we get out of bed and think like a small business. How do we improve customer satisfaction, how do we improve our revenue, expense management; it’s a different business strategy than the old Avaya or Nortel companies had,”

The Larger Market

This IPO would come amid other recent notable IPOs such as Linkedin or the upcoming Groupon IPO. Yet, not all observers are completely enthusiastic about the offering. Avaya reported a net loss of $871 million for the 2010 fiscal year, with about $5 billion in revenue. For the previous two quarters, the total net loss has been $612 billion on $2.76 billion of revenue. Total debt is up almost $1 billion from the fiscal year ending Sept 30, 2009.

Many of its competitors, such as Cisco and Juniper Networks have stronger balance sheets. Careful scrutinization of the company’s plan going forward is required to understand exactly how well prepared the company is for the future.

Yet the company remains optimistic about its plans. Mr. Pellizzari commented, “We’ve been quiet for a while, if you will, [but] we’re out there now getting those customers,”

The call center segment remains a rapidly growing industry. Avaya’s plans may or may not lead it to come out on top. Only time will tell how the call center technology industry will evolve


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