Avaya Posts Second Sequential Quarterly Profit

Avaya turned in its second profitable quarter in a row, reporting earnings of $66 million, or 15 cents per share, for the quarter ended Sept. 30. That compares to a loss of $544 million, or $1.50 per share, the same quarter a year ago.

Results included a gain of $46 million from changes to the company's pension and retirement plans.

Excluding the gain, financial analysts expected the company to earn 4 cents per share, according to Thomson Financial/First Call.

Revenue for the quarter dipped slightly to $1.12 billion, down from $1.15 billion the same quarter last year.

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Avaya's IP line shipments rose by 27 percent over the third quarter and nearly doubled year over year, said Don Peterson, chairman and CEO of Avaya, Basking Ridge, NJ.

"An interesting trend that we are seeing within our IP communications business is that sales of gateways are increasing at a faster rate than sales of communications servers," Peterson said. "This indicates to us a couple of key points: first, customers that have already deployed our IP solutions appear to be adding additional sites to the IP network, and, second, larger customers are beginning larger deployments of our IP offerings across their business," he said.

Despite such positive signs, an overall recovery is not yet at hand, Peterson said.

"Current market indications are encouraging, and some sectors, such as financial services, have begun to show improvement, but we have yet to see any hard evidence that a broad-based sustainable recovery is at hand," he said.

For fiscal 2003, Avaya reported an earnings loss of $88 million, or 23 cents per share, compared to a loss of $666 million, or $2.44 per share in fiscal 2002.

Revenue for the year dropped to $4.34 billion, down from $4.96 billion in 2002.

Shares of Avaya closed up 21 cents Tuesday at $13.45 prior to the announcement.