Avaya Expects 3Q Revenue Dip, Earnings Growth

Avaya

According to interim results for the quarter ending June 30, Avaya also said it expects a modest increase in earnings per share compared with the second quarter.

"Customer spending continues to be constrained, resulting in volume impact on sales, and we see general weakness across nearly all geographies. As a result, the slower conversion rates could cause this quarter to be a flat to modest decline in revenue," said Garry McGuire, CFO and senior vice president of operations at Avaya, Basking Ridge, during a conference call.

Avaya reported $1.28 billion in revenue for its second quarter.

Customers continue to defer purchases because corporate profits, cash flow and the availability of short-term credit have not yet stabilized, McGuire said.

"Our service revenue from moves, adds and changes is also being affected by customer downsizing and deferral of discretionary spending," he said.

McGuire said the company does not expect to see significant revenue from new products and services, such as its Multimedia Contact Center introduced last week, until the fourth quarter.

"In the case of our ECLIPS [Enterprise Class IP Solutions products, which have a longer sales cycle, we don't expect to see a significant take-up until our large enterprise customers regain a measure of economic confidence," he said.

Subject to Avaya's revenue mix for the quarter, McGuire said the company expects an increase in earnings per share "thanks to continued discipline in cost and expense management."

Avaya reported a loss of 5 cents per share for the second quarter.

Shares of Avaya closed down 50 cents Monday at $5.60 prior to the announcement.