Avaya Sees Continued VoIP Growth in Third Quarter

"In the future, I believe that 2004 will be the year to look back to in noting when the adoption of IP telephony began to accelerate," said Don Peterson, chairman and CEO of Avaya, Basking Ridge, NJ.

For the third fiscal quarter ended June 30, Avaya reported earnings of $61 million, or 13 cents per share, compared to earnings of $8 million, or 2 cents per share the same quarter a year ago.

Excluding discontinued operations, Avaya reported earnings of $58 million, or 12 cents per share.

Revenue for the quarter climbed to $1.02 billion, up from $929 million the same quarter last year.

Financial analysts expected the company to report earnings of 12 cents per share on revenue of $1.02 billion, according to Thomson Financial/First Call.

As in previous quarters, growth in sales of IP telephony products continued to offset declines in sales of traditional telephony products, Peterson said.

Avaya's product sales for the quarter increased 11 percent year-over-year, including 33 percent growth in sales of IP Office, Avaya's SMB-focused IP telephony platform.

All three of Avaya's business segments -- enterprise communications, SMB and services -- achieved profitability during the quarter.

The company has an optimistic outlook for its fourth quarter, said Garry McGuire, Avaya's CFO and senior vice president of corporate development.

Earlier on Tuesday, Avaya introduced new wireless LAN equipment aimed at extending IP telephony to wireless networks. Developed through a partnership with Motorola and Proxim, the new products include the Avaya W310 WLAN Gateway and Avaya W110 WLAN Access Points. Along with Avaya's Communication Manager IP telephony software, the new products help build a voice-over-WLAN solution to support the new Motorola CN620 Mobile Office Device, a handheld device that supports both WLAN and cellular technologies.

"At enterprises using the system, cell phones would have all of the functionality of -- and could entirely replace -- office phones for mobile workers," Peterson said. "Developments such as this indicate the exciting opportunities we face as we work to create and bring to market new offerings that save time and money, improve efficiency and enable companies to more effectively conduct business."

List prices for the new products, available now, are $8,995 for the W310 WLAN Gateway and $495 for the W110 Access Points. Pricing wasn't available for the new Motorola products or bundled solution.

Shares of Avaya closed down 22 cents at $12.50 prior to the earnings announcement.

MARIE LINGBLOM CONTRIBUTED TO THIS ARTICLE.