The telecommunications firm Avaya expressed “substantial doubt” it can continue operating after reporting lower-than-expected third quarter revenue Tuesday. The beleaguered Durham-based company reported earning $577 million in the third quarter, down 21% from the same period in 2021.
Avaya shares dove 45% Tuesday, and its stock price has tumbled for more than a year — from more than $31 in February 2021 to less than a dollar today.
In its earnings report Tuesday, Avaya stated “there is substantial doubt about the Company’s ability to continue as a going concern.”
Avaya employs around 7,850 people globally and serves customers in 190 counties. The company declined to tell The News & Observer how many people it employs in North Carolina.
The missed revenue target is the latest in a string of setbacks for the company, which relocated from California to the Triangle in 2020. Avaya also missed its revenue target for the second quarter in May, and on Tuesday, The Wall Street Journal reported the company’s $600 million debt deal with Goldman Sachs and JPMorgan Chase collapsed.
In recent years, the company has shifted toward offering clients cloud-based communication services through subscriptions, but the change hasn’t been seamless. On Tuesday, Avaya announced subscription revenues were $64 million off the company’s forecast.
Kieran McGrath, Avaya’s executive vice president and chief financial officer, assured investors the company would act. “We are not standing still,” he said. “We are taking an aggressive set of actions to reset our run rate of cost and expense.”
Avaya employees have been told to expect layoffs in the near future, two workers who wished to speak anonymously for professional reasons told The News & Observer.
On Tuesday, one worker said management held a staff meeting to discuss the direction of the company.
“It’s stressful,” the employee, who lives in the Triangle, said. “It’s frustrating. It’s hard to plan really much of anything because you don’t know what the team is going to look like and who’s going to be where and what resources they’ll have.”
Despite the recent financial reports, the Avaya employees said they didn’t feel their company’s future was all gloom. They said their initial interactions with new CEO Alan Masarek, who took over Aug. 1, have been encouraging.
Masarek previously headed Vonage, a cloud communications rival.
During the earnings call Tuesday, Masarek balanced a hopeful tone while acknowledging the disappointing realities.
“So, while all large-scale transformations are tough, Avaya has an enviable set of assets that are foundational to its success,” he said. “Avaya is an iconic brand with a truly global customer footprint.”
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