Opinion: Avaya Is A Cheap Tech Deleveraging Opportunity Seeking Alpha Apr. 13, 2022
Summary
- Similar to companies like Avid Technology, Avaya is making a business model change by shifting its clients, and acquiring new ones, on a subscription rather than with perpetual licenses.
- This subscription product is a communication and collaboration suite offered on the cloud, with many customers needing them for contact/call centers.
- An important dynamic that investors should wonder about is if the growth is actually there, as customers are basically becoming rebilled as they become subscribers rather than license owners.
- However, new logos is the metric to look at and it is growing, so the topline stagnation should come to an end once critical mass is reached beyond 44% in the mix.
- Incremental sales are coming from subscription revenue which is lower ticket, and with decent economics and strong WFH markets, deleveraging could be on the horizon.
- Looking for a helping hand in the market? Members of The Value Lab get exclusive ideas and guidance to navigate any climate.
Published on the Value Lab 9/4/2022, relevant data updated for this release
Avaya (NYSE:AVYA) is a bit of a tough nut to crack. It went bankrupt in 2017, sold its enterprise network business, started offering its communications suite on the cloud and has been making the transition from selling perpetual licenses to subscriptions. It carries a large debt load that has harangued profitability, but has nice markets. It could make for a deleveraging story as its cash generation profile improves. The topline stagnation hides the true performance of the business, which is quite strong. Trading cheaply, we have become quite interested in the Avaya story as the price retreats massively to pre-COVID levels.
NRLN Avaya Retirees Chapter Newsletter
February 16, 2022
Avaya 1st Fiscal Quarter results not good news to start the new year.
As we see it, Revenue is Down, Margin is down, Expenses are UP and Debt is UP. Avaya reports Year to Year loss of $66 million vs $4 million for the prior year.
Product sales are down $35 million and Services are only up $5 million. General expenses went up $16 million.
Borrowing went up and the cost of debt increased up.
Avaya does not have a good balance sheet and cannot afford for any long period of not making money!!!
They need to resize the business. Pray that the recovery helps Avaya’s ability to make money.
Click the headline to see full results:
Avaya Holdings Corp. – Avaya Reports First Quarter Fiscal 2022 Financial Results
Click here for a complete listing of Avaya Holdings Corp. press releases.
https://investors.avaya.com/investor-news/default.aspx
Vern Larson, President
Avaya Retirees Chapter of the NRLN
There are numerous Avaya press releases available.
- Click here for a complete listing of Avaya Holdings Corp. press releases.
- Click here to access one particular press release that covers how the Avaya -Work-from-Anywhere solutions that is helping people work remotely during the quarantine.
- Click here for another press release related to COVID-19
Avaya Represented (Union) Pension Plan – Annual Funding Notice was recently mailed to those covered
There was no major change in funding as the Moving Ahead Act from 2014 is still in effect. This allows the company to use a more generous interest rates to attain getting closer to full funding by spreading out the time a little longer. There is also some relief to allow a delay for annual funding this year due to COVID-19 if a company meets certain thresholds, so Avaya will most likely be doing that. Many companies have already issued notices that they will be doing this. The law allows them to postpone funding in 2020 but will need to pay it in 2021 with interested incurred.
Avaya Represented (Union) Pension Plan funding
The plan is underfunded but not to the extent that any action is required by the company or by any outside body. The Avaya fund still has the backstop of the PGBC. I don’t think there is any question that all those in this plan will get their pensions. If Avaya were to ever become a huge success and fully fund this pension plan, they could end the plan by paying out the annuity funding to the individuals in the plan. However, we don’t see that happening. If Avaya were to go broke then the PGBC still comes in to protect the individual getting a pension just as they did for our Salaried Penson Fund during the past Avaya Bankruptcy settlement.
The Avaya Represented Pension Plan as of end of March had a little over 1,800 terminated vested participants not aged in yet and roughly 4,200 in pay status.
I want to remind everyone to make sure they provide address changes to the pension center when they occur and also if they are age 65 or over, they need to call the pension center to start their benefits. Avaya currently has about 70 that have not started taking their vested pensions yet. (If you know anyone that is vested in this category tell them to contact Avaya Pension Center.)
- For pension or NCS issues contact the Pension Service Center at 1-844-868-6236.
- For healthcare enrollment or eligibility issues contact Avaya Healthy Decisions Benefits Center at 1-800-526-8056.
- For urgent benefit issues, email benefits@avaya.com
- VIA Benefits, Avaya – 1-855-535-7157
- This is the sign-in page – https://my.viabenefits.com/account/signup
Closing Comments
In closing, I hope all of you and your families stay well and also to remind you that the NRLN Annual appeal letter was mailed to all members a couple of weeks ago. Please help us with what you can to continue our next big fight regarding equal treatment for regular Medicare members as those provided to Medicare Advantage members. If you don’t have your letter you can contribute at this link here, Contribute to the NRLN. If you have already made your 2020 contribution, thank you. Remember, make sure to note that you are an Avaya retiree.
Best regards,
Vern Larson, President
NRLN Avaya Retirees Chapter and
NRLN Vice President -Membership Development
*Note: SaaS is a method of software delivery and licensing in which software is accessed online via a subscription, rather than bought and installed on individual computers. Avaya’s cloud-based SaaS platform helps IT professionals strategically manage and forecast IT costs (also known as subscribeware or rentware).
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