Avaya Plans Second Public Appearance with IPO Filing
Unified communications and networking vendor Avaya plans to go public once again, filing a $1 billion initial public offering proposal with the Securities and Exchange Commission. The VAR Guy has noticed a rash of technology companies hitting the market of late, and wonders if Avaya’s move will spur other privately held companies to take the stock market plunge (in a good way).
First, a little background: Avaya, as you may or may not know, was spun-off from Lucent Technologies (now Alcatel-Lucent) in 2000 and was a public player from its inception until 2007, when it was acquired by private equity firms Silver Lake Partners and TPG Inc. for $8.3 billion. Since then, the company has been honing its unified communications and collaboration portfolio to the point where the company has taken up residence as a leader in Gartner’s ‘Magic Quadrant’ for unified communications and corporate telephony technologies.
In its 2010 fiscal year, Avaya generated $5.06 billion in sales – a 21 percent increase from the previous year – but suffered a net loss of $381 million (still, that was lower than the previous year’s loss of $420 million).
Plus, Avaya has its share of debts. According to the Financial Times, its buyout in 2007 included $5.9 billion in debt, and more money has since been borrowed to fund its acquisitions, including the assets obtained from Nortel in 2009 and its Konftel buy in early 2011. Avaya hopes to raise $5 billion from the IPO — money which the company plans to use to pay down some of that debt.
But is the market ready for another technology company? In May 2011 alone, social networking site LinkedIn wowed the market on its first day of trading, with shares more than doubling, while online coupon site Groupon filed a $750 million IPO (maybe not a company exactly within The VAR Guy’s purview, but still worth noting). However, semiconductor firm Freescale Technologies entered the market to a lukewarm reception, having to lower its initial price.
So with the market clearly bent on supporting “hot” areas of technology – who can argue with the success of social networking? – can Avaya once again find itself a decent parking space on Wall Street? The VAR Guy thinks so – Avaya’s not considered a leader in UCC for nothing, and it would be a short jump to see the company find equal success in the executive boardroom and the trading floor.