Avaya Increases Q1 Profit

For the quarter ended Dec. 31, Avaya reported earnings of $31 million, or 7 cents per share, up from $10 million, or 2 cents per share, the same quarter the previous year.

Earnings for the quarter were reduced by 13 cents per share, including costs and write-offs associated with its acquisitions of Spectel and Tenovis, both of which closed during the quarter.

Revenue for the quarter climbed to $1.14 billion, up from $971 million a year ago. Revenue results were aided by the impact of the acquisitions and favorable currency rates, the company said.

Financial analysts expected the telecommunications vendor to report earnings of 18 cents per share on revenue of $1.12 billion, according to Thomson Financial/First Call.

Sales of IP communications equipment continued to rise during the quarter, said Don Peterson, chairman and CEO of Avaya, Basking Ridge, N.J., during a conference call. For example, IP line shipments to large enterprises grew by more than 50 percent compared to the same quarter a year ago.

Excluding acquisitions, Avaya's total product sales grew by 7 percent, he said.

However, growth in U.S. product sales lagged that of other geographies, he said.

"Product sales in the U.S. were not up to our expectations," Peterson said. While product sales, excluding the impact of currency and acquisitions, grew at double-digit rates in multiple international regions, they were flat with the year-ago period in the U.S., he said.

Peterson attributed the flat U.S. product sales in part to strong sales during the previous quarter to close out fiscal 2004.

Nevertheless, Avaya remains on track to hit goals of revenue growth between 25 percent and 27 percent for 2005, executives said.

Shares of Avaya closed down 21 cents at $15.15 Tuesday prior to the announcement.