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Avaya ponders post-merger moves

With merger near completion, Avaya looks to accelerate deployment of its communication-enabling technology
By Brad Reed , Network World , 10/25/2007

With Avaya reportedly close to completing its merger with Silver Lake and TPG, some of its customers may feel concerned that the company is planning to dramatically change its services.

But Karyn Mashima, Avaya’s senior vice president of strategy and technology, says that going private will not dramatically affect or alter the company’s long-term business strategy, but will only help to accelerate the strategies the company already has in place. The key to the merger, she says, is that it will give the company the flexibility to continue its investments in unified communications technology without facing constant pressure from Wall Street to perform well on a quarterly basis and to keep its stock price high. Mashima also says that both Silver Lake and TPG, the two private equity firms that will be the company’s major shareholders after the merger is complete, have already signed off on the company’s strategy.

“They are fully backing our management team, and they are fully backing our strategies,” she says. “As our major shareholders, they will definitely give us guidance, but they’ve said our strategy is what it is, and that they are in total support of management team.”

One of the major questions surrounding the merger has been whether Avaya will use its newfound freedom from the Wall Street microscope to either roll back or sell off its legacy TDM  business in order to concentrate fully on providing VoIP. Although Mashima doesn’t get into specifics about the company’s future plans for its TDM services, she says the company’s main focus now is on developing communication-enabling services that aren’t restricted to VoIP. 

She says the company is specifically looking to expand upon services such as its Communications Process Manager, which gives businesses a fully closed loop capability of communications that lets them contact employees in real-time simultaneously through e-mail, SMS and both fixed or mobile telephone.

Bern Elliot, a research vice president at Gartner, says he doesn’t expect drastic short-term changes to Avaya’s business model, and that he would be surprised to see them abruptly end the life of their TDM technology and services. Although he sees TDM products being gradually phased out in favor of VoIP, he says that if Avaya suddenly killed off its legacy technology, the company would run the risk of losing customers to other TDM providers.

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