Avaya Eyes More Layoffs

By Matthew Hicks  |  Posted 2002-07-23 Print this article Print

After reporting a net loss of $37 million for Q3, Avaya looks to further reduce expenses.

Avaya Inc. battled a continued drop in earnings for its third fiscal quarter and now is planning to make further cuts in the fourth quarter. The Basking Ridge, N.J., company on Monday reported a net loss of $37 million for the quarter ended June 30, which included $9 million in one-time charges related to an earlier restructuring and an asset impairment. That compares with net income of $24 million for ongoing operations for the same quarter a year ago. Without the one-time charges, the third fiscal quarter net loss was $32 million, compared with net income of $67 million a year ago. Blaming delays in large enterprise spending, Avaya reported that revenues fell 29 percent to $1.22 billion for the third fiscal quarter from $1.71 billion in the same period a year ago.
While Avayas Chief Financial Officer Garry McGuire said the company has made gains in reducing expenses, it needs to do more. That includes reducing headcount in some parts of the business, he said in a statement. He didnt specify the number of employees to be cut or from where.
Avaya also will be eliminating certain real estate holdings and reducing IT-related expenses. Because of the restructuring, Avaya is expecting to take a charge of between $150 million and $250 million for the fourth fiscal quarter. "These actions are designed to enhance liquidity and drive additional efficiencies in the business," McGuire said in the statement. McGuire blamed steeper-than-expected revenue declines for the actions. Revenues across all of Avayas business segments, except for Connectivity Solutions, declined quarter-to-quarter. Overall, they were off 4.7 percent between the second and third fiscal quarters. "Avayas revenue growth continues to be challenged by constrained IT spending by customers," said Don Peterson, Avayas chairman and CEO, in a statement. "Our large enterprise customers, in particular, delayed purchase in the third quarter." Avaya also said it is planning to cut the amount it had targeted for capital spending for the fiscal year from $175 million to no more than $125 million. Related stories:
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    Matthew Hicks As an online reporter for eWEEK.com, Matt Hicks covers the fast-changing developments in Internet technologies. His coverage includes the growing field of Web conferencing software and services. With eight years as a business and technology journalist, Matt has gained insight into the market strategies of IT vendors as well as the needs of enterprise IT managers. He joined Ziff Davis in 1999 as a staff writer for the former Strategies section of eWEEK, where he wrote in-depth features about corporate strategies for e-business and enterprise software. In 2002, he moved to the News department at the magazine as a senior writer specializing in coverage of database software and enterprise networking. Later that year Matt started a yearlong fellowship in Washington, DC, after being awarded an American Political Science Association Congressional Fellowship for Journalist. As a fellow, he spent nine months working on policy issues, including technology policy, in for a Member of the U.S. House of Representatives. He rejoined Ziff Davis in August 2003 as a reporter dedicated to online coverage for eWEEK.com. Along with Web conferencing, he follows search engines, Web browsers, speech technology and the Internet domain-naming system.

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