Avaya Cuts 1,900 Jobs, Lowers 2Q Revenue Forecast

The job cuts will impact about 8 percent of the network hardware vendor's 23,000 employees in areas including, service and administration, as well as its connectivity business, which Avaya is in the process of selling, said Avaya CFO Garry McGuire, in a conference call.

"We are confident that we are effectively addressing any perceived or actual liquidity issues facing us," McGuire said.

The cuts should result in annualized savings of $180 million to $200 million, he said.

Avaya cut its revenue expectations range for the second quarter, ending March 31, to $1.24 billion to $1.275 billion, down from a range of $1.254 to $1.358 billion.

The company expects a net loss from ongoing operations for the quarter of 6 cents to 10 cents per share, compared with its previous estimate of an 8-cent-per-share loss.

Including charges, the company expects to report a net loss of 68 cents to 72 cents per share for the quarter.

In addition, Avaya plans to sell nearly 14.4 million shares of common stock to private equity firm Warburg Pincus Equity Partners, which will also convert $438 million of Avaya preferred stock into 38.3 million shares of Avaya common stock and exercise warrants to purchase another 286,000 shares.

All told, Warburg Pincus will own about 53 million shares, or abut 15.5 percent, of Avaya's outstanding common stock, pending anti-trust clearance.

Jeffrey Harris, senior managing director of Warburg Pincus, resigned from Avaya's board prior to the board's approval of the stock transaction. The firm retains its right to nominate an unaffiliated director to the board as long as it holds at least 26 million shares, McGuire said.

Avaya has retained Bear Stearns to raise $100 million in new equity and is looking at repaying its bank debt and replacing it with longer-term debt, McGuire said.