Thread regarding Avaya layoffs

FAQ

The only thing interesting in yesterday’s WSJ article on Avaya is the headline: Avaya: How an $8 Billion Tech Buyout Went Wrong. The headline describes an article I’d like to read – for prior to the buyout, Avaya was an extremely healthy, profitable, and debt-free company.

But the article isn’t really about what went wrong, and more about what might happen. Basically, it just rehashed last month’s news.

1.Happy Thanksgiving Avaya Debt Holders

2.Clickbait and the Avaya Feeding Frenzy

3.Avaya Weighing Bankruptcy Filing, Sale of Call-Center Software Unit

I contend that Avaya’s near term future is totally unknown. My impression is the Avaya leadership team is fiercely juggling a number of potential outcomes. Chapter 11 bankruptcy is certainly possible but not desirable.

My opinion has been evolving, but remains similar to what I posted back in August in: A Fork in Avaya’s Road. Simply that the company will split up into several companies and through various mechanisms refinance its debt.

I believe Avaya will avoid bankruptcy. If not, then the real losers will be Silver Lake and TPG. Employees and customers should fair ok, but chapter 11 will significantly damage the company’s long term viability.

None of Avaya’s problems individually are insurmountable. The problem is its combination of problems requires simultaneous moves. Avaya has to negotiate a whole bunch of solutions with different stakeholders, and each new negotiation impacts the others. Exacerbating the situation is the various debt holders not only have different due dates, but different seniority creating pecking order mayhem. The situation is prompting lots of conversation and questions, so without further ado… Here is

My Avaya FAQ

Is Avaya going out of business? Highly unlikely. There is gong to be some re-organization. Parts may be sold and/or Avaya may split into multiple companies. There will be some debt-to-equity swaps and maybe even some IPOs. Do not confuse Chapter 11 (reorganization) with Chapter 7 (liquidation). Several well known companies have recovered from Chapter 11 including General Motors, Southland (7-11), and American Airlines. The company owes more than it has, but the big payables are still off a bit. Unfortunately, the word “bankruptcy” has real stigma. Customers will panic, competitors will pounce, and sales will decline.

How is it possible to avoid bankruptcy? Bankruptcy happens when a company doesn’t have the cash to meet its obligations. There are numerous ways Avaya can get cash including asset sales, refinancing existing debt, and a debt-to-equity swap. Debt restructuring does not require chapter 11. The company can work with its stakeholders to reduce or renegotiate debts in order to improve or restore liquidity so it can continue operations. Chapter 11 is required when the various stakeholders can’t agree.

When Will We know? It will take as long as it takes. Avaya has time. If/when Avaya runs out of options it will pull the Chapter 11 ripcord quickly. The fact that it hasn’t done so means there’s still a chance it can avoid it. The people that know what’s going on can’t publicly comment. Don’t expect any word from Avaya until it’s official. The sooner the better as the stress and uncertainty are taking a toll. I expected news this year, but now feel it’s going to push into Q1-17. It was actually about a year ago that Avaya hired Goldman Sachs.

Why is it so hard? Avaya is one company today with a bunch of debt. Splitting up the company isn’t too hard, but splitting up the debt is. Another approach is to architect a solution and then execute on all the components simultaneously. Regardless, it’s changing the wings while flying. There’s no right way or order to this – you work the problem one piece at a time. It’s also very hard to determine the value of parts of a company as revenue and costs are intermingled. I am sure Kevin Kennedy will have so many stories to tell when it’s all over that he may write another book.

Why Avaya? Enterprise communications are undergoing significant changes – prem to cloud, workstream solutions, video, mobile-first, IoT, and CPaaS adoption are the big ones. It is always tough to adapt to a changing market, and especially so for large, global companies like Avaya. While its situation is more dire, Avaya is not alone in the transformation game. Just about every other enterprise comms vendor is undergoing radical changes including Microsoft, Cisco, Polycom, Interactive Intelligence, and ShoreTel. The real differences are Avaya is not diversified and is more leveraged. Simply stated: Avaya bet bigger.

Is there more to the story? Yes! I’ve seen parts of Avaya’s guarded road map, and I believe there is much more to the story. I’m certainly more confident about its future than I was before I saw the road map. Also, regardless of what you think of Avaya the company or Avaya’s products, know that some very smart people are engaged in finding a solution to its debt. Silver Lake, TPG, CenterView, and Goldman Sachs – these are not your average branch managers. Plus, they have skin in the game. No one was making fun of Silver Lake after it sold Skype.

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So tired of hearing disparaging comments about Nortel engineers' talent/dedication/skill. I was a red-side developer and then FSE for decades, back to before S75, and the blue-side engineers that I worked with were every bit as superb as ours. Some of the blue executives were hopeless, but then so were too many of the red ones we had before the acquisition.

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"is Avaya going out of business? Highly unlikely. There is gong to be some re-organization. Parts may be sold and/or Avaya may split into multiple companies. "

Do you not get that when a company splits, the original company ceases to exist? Sure, some of the technology, people, and perhaps even the name will continue on, but the company itself will be gone. Your FAQ is as worthless as the people leading Avaya.

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By all means, blame Nortel if it makes you feel better.

In reality, the LBO put the gun to Avaya's head and the economic downturn pulled the trigger. Everything after that is just slow, agonizing death, with last rites administered by lackluster and unimaginative management.

Whatever you may think of it, Nortel's Enterprise business was still profitable up to when it was purchased by Avaya, but Avaya's we-won-you-lost attitude made it impossible to capitalise on the acquisition.

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Nortel was and is the worst. Bunch of whiny crybaby Canadians that like to blame others for their insufficiencies. Avaya should have never bought them. The best sale Nortel ever made was convincing Avaya to let the infected board their ship.

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This is one of the many stories in the Telecommunications industry, all with the same ending.

Personally I am hoping that some kind of a Nortel product will survive this Avaya dissaster

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Reference "Several well known companies have recovered from Chapter 11 including General Motors, Southland (7-11), and American Airlines" ... unfortunately in context of Avaya, the name of Nortel is one that comes to mind right away ... and Nortel certainly never made it out of Chapter 11. Plus Avaya pretty much screwed up retention of the Nortel customer base, majority of whom went elsewhere, after purchasing Nortel very much for same. Much of Avaya customer base also now likely looking at other options given ongoing and long running uncertainty re Chapter 11 etc.

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yes but please don t forget few kpi ..

  • kk is probably competing to get elected as N 1 in the worst leader ever ... category; this can explain

  • it takes time to achieve such .... achievement

  • it takes time to sink a good company ..

of course, kk was helped by owners to get all the money out of the company and replace it with debt ..

i expect he still will receive between 10 and 15 USD M for 2016, again

he probably believes he deserves such comp ...

perhaps only question is how much (many ?) associate to fire to balance the LT comp/bonus plan for 2015 ...

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Blah Blah Blah- excuses, excuses. The board has to be inept, they hired Goldman las spring, they have made this plan public in may and probably were considering it long before that. Here it is now almost 2017 and they are as confused as ever. Personally I could care less, I am hoping to get laid off, I await that with anticipation, but there are a few people who might actually care and even a smaller subset who think we are still relevant so make a decision for them at least.

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Thanks KK !

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