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Avaya Inc. reported revenue of $1.072 billion for the third quarter of fiscal 2003, reflecting relative sales stability from second-quarter revenue of $1.081 billion.
The Basking Ridge, N.J., company reported a net income of $8 million for the quarter, a considerable improvement over the second-quarter net loss of $41 million. To reduce expenses over the coming quarter, Avaya plans to trim the workforce through an early retirement offer to union employees and through additional staff reductions.
Avaya Chairman and CEO Don Peterson said the company has reached a point in its history and the economy has reached a point in the business cycle at which he can say confidently that revenues have stabilized.
“We have made a lot of progress in 2003,” Peterson said during a conference call Thursday evening. “Its clear that we are winning in IP telephony.”
Revenues from the sale of Internet Protocol hardware and software improved over 2003, offsetting a decline in revenues from traditional voice products, Peterson said, adding that momentum is growing in converged networks.
“There does appear to be a consensus emerging that companies, for the most part, are growing a bit more confident about their future prospects,” he said. “We now believe this business is at an inflection point.”
International sales presented a weak spot for Avaya during the quarter, particularly in Europe, the Middle East and Africa, where pricing pressure affected sales. “We, like other companies, experience some challenges in international markets,” Peterson said, adding that sales in the Japan and Asia Pacific markets were about flat over the quarter.
Despite the stabilized revenues, Peterson expressed caution about the future. “It remains to be seen how broad or deep or sustainable this confidence is,” he said. “Even with an improving outlook, the events of the past three years have taught us we cannot afford to be complacent.”
The company plans to devote more resources to services, which are increasingly important as enterprises migrate toward converged networks, Peterson said. “We are focused on investing in our services business to further build our competitive advantage,” he said.
Today, the company announced that Merrill Lynch & Co. Inc. will deploy Avayas IP telephony system at its corporate headquarters and at a new regional headquarters in Tokyo, and Avaya Global Services will implement the system.
Earlier this week, Avaya disclosed a joint marketing agreement with Hewlett Packard Co. to sell IP products and services to small and mid-sized businesses.