Avaya To Plunk Down $152M For Reseller Expanets

Avaya, which has a strong position in IP telephony, placed the winning bid in an Oct. 29 auction for substantially all of Expanets' assets from the solution provider's parent company, NorthWestern, which filed for Chapter 11 bankruptcy protection in September.

The deal, expected to close by the end of this quarter, is Avaya's second services-related acquisition in a month.

Expanets, an Englewood, Colo.-based provider of converged communications solutions for the SMB market, also has partnerships with equipment vendors Cisco Systems, Nortel Networks, Siemens and NEC, as well as carriers AT&T, Qwest Communications International and Verizon.

Avaya partners voiced concerns about the vendor's invigorated push into services,where many of them derive much of their profits,and questioned its long-term commitment to indirect sales.

"This would definitely put smaller channel partners like us at a disadvantage," said Frank Rust, vice president of TeleServe Technologies, an Indianapolis-based solution provider, who characterized the deal as "surprising." Despite the tough economy, TeleServe's sales of Avaya products are on track to double this year over last year, he said.

Avaya executives were not available for comment. An Avaya spokeswoman said the deal does not signify a change in its channel strategy and Avaya's commitment to the channel remains strong.

Avaya's services organization plays a key role in the vendor's quest to be the leading vendor of IP telephony solutions, said Don Peterson, chairman and CEO of Avaya, Basking Ridge, N.J., during a recent conference call to discuss the company's financial results.

Both Avaya and Expanets can trace their heritage to Lucent Technologies. Expanets purchased Lucent's small- and midsize-business sales and services unit in April 2000, four months before Avaya was spun off from Lucent.

The Expanets purchase is the latest move by the vendor to bolster its services business. Avaya

earlier in October completed its acquisition of the professional and managed services business units from Vista Information Technologies, Herndon, Va.

For its fiscal year ended Sept. 30, Avaya reported services revenue of $1.83 billion, down from $2.07 billion in the previous fiscal year.