U.S. Business Fuels Avaya's 3Q Growth

The vendor&'s U.S. business had been struggling following the implementation late last year of a segmented sales strategy that expanded its direct sales force&'s coverage of strategic large enterprise accounts. Channel partners now lead the vendor&'s SMB sales efforts and work in tandem with the Avaya sales force on midtier enterprise deals, often taking the lead, Peterson said, during a conference call with financial analysts.

“Nine months into the new strategy we see evidence that it is starting to take hold,” Peterson said, noting that both U.S. indirect and direct sales rose sequentially. “Based on results reported to us by our distributors, indirect sales out -- which are sales by our business partners to end customers -- also rose sequentially to the highest level since Q4 of last year,” he said.

Overall U.S. sales rose 4 percent compared with the previous quarter, while U.S. product sales grew 10 percent sequentially, Peterson said. IP line shipments in the U.S. grew 30 percent sequentially.

For the quarter ended June 30, Avaya reported earnings of $194 million or 40 cents per share, including a $123 million gain from a tax settlement and tax adjustments. That compares with $61 million, or 13 cents per share, the same quarter last year.

Excluding special items, Avaya earned 14 cents per share.

Revenue for the quarter climbed to $1.24 billion, up over 21 percent from $1.02 billion the same quarter a year ago.

The Basking Ridge, N.J., company also retired its debt during the quarter.

For its fourth fiscal quarter, Avaya predicted continued growth in revenue and operating earnings.

Shares of Avaya closed down two cents at $9.23 prior to the announcement.