Avaya prepares for life as a private firm

Avaya Inc. went private Friday after the official consummation of the company’s US$8.3 purchase by two American investment companies.

“Today marks the beginning of an exciting new era for Avaya,” Lou D’Ambrosio, the company’s president and CEO, said in a statement.

“As a private company, working with Silver Lake and TPG Capital, we have an unprecedented opportunity to accelerate our strategy, act boldly in the marketplace, and serve our customers with even greater innovation and responsiveness.”

Like the proposed privatization of Bell Canada, managers are betting that removing the company from the stock market will make it a more flexible and vigorous organization better able to face competitors.

“In a private environment we can make some moves a bit more aggressively to make the company nimbler, faster and quicker on the strategies we already have in place,” chief operating officer Mike Thurk told ITWorld Canada in June.

At the time he said he didn’t expect the new owners, to initially make great changes in Avaya’s product line or strategy. But, he added, private owners could “make some longer-term bets in the short term,” he said in the interview.

For example, he said, Avaya could decide to spend heavily on bringing a product line to market earlier than scheduled, spending that might be harder to do for a publicly-traded company trying to maximize profits.

Avaya, spun off from parent Lucent Technologies in 2000, focuses on selling to mid-to-large-sized organizations.

Yankee Group telecommunications analyst Zeus Kerravala said in an interview that one challenge the company faces is that a large chunk of its revenue comes from sales and servicing TDM equipment.

Avaya has to get existing customers to shift to IP-based solutions, he said, without disrupting revenue.

Earlier this month Avaya reported revenues for fiscal 2007 of $5.279 billion (all figures U.S.) compared to $5.148 billion last year.

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