Avaya Grows Q4 Channel Sales

"We're very pleased with where we are right now [with our] go-to-market model and our channel mix," said Lou D'Ambrosio, president and CEO of Avaya, Basking Ridge, N.J., in a conference call with financial analysts. Avaya earlier this month launched a new partner program and pledged to put more emphasis on teaming with solution providers.

Avaya also marked a changing of the guard during the quarter, with D'Ambrosio taking the helm in July, replacing Chairman and CEO Don Peterson. Peterson left his post as chairman of the board at the end of the quarter and was replaced by Philip Odeen as non-executive chairman, effective Oct. 1.

For the fourth quarter, ended Sept. 30, Avaya reported total revenue of $1.36 billion, up some 5 percent from $1.3 billion a year ago.

Indirect sales grew nearly 20 percent to $388 million compared to year-ago results, accounting for 56 percent of the vendor's $690 million in quarterly product revenue. Direct product sales dropped nearly 2 percent to $302 million, accounting for 44 percent of product revenue.

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Worldwide product sales grew 9 percent compared to the same quarter a year ago, with IP line shipments increasing in the high 20-percent range, the company said. Services grew 2 percent, while rental and managed services declined 1 percent.

Earnings for the quarter were heavily impacted by restructuring charges related to previously announced headcount reductions in the United States and EMEA regions. Profit for the quarter dropped to $48 million, or 10 cents per share, down from $660 million, or $1.36 per share, in the same quarter last year.

Year-ago results included a significant tax benefit.

Excluding charges and special items, the company earned 17 cents per share for the fourth quarter, compared to 20 cents per share for the same quarter a year ago.

Financial analysts expected the company to report quarterly earnings of 13 cents per share on revenue of $1.34 billion, according to Thomson Financial.

Avaya said it expects to record additional restructuring charges in the first half of fiscal 2007.

For fiscal 2006, Avaya reported earnings of $201 million, or 43 cents per share, compared to $921 million, or $1.89 per share, for fiscal 2005. Revenue for 2006 climbed to $5.15 billion, up from $4.9 billion in 2005.

Shares of Avaya closed down five cents at $11.79 Tuesday prior to the announcement.