Avaya Says VoIP Fueled Quarterly Growth

DENVER " Avaya Inc., the Lucent Technologies Inc. telephony spinoff, on Tuesday (July 27) reported third quarter revenues and operating margins ahead of company projections for the fiscal year.

Avaya (Basking Ridge, N.J.) said revenues rose 9 percent in a traditionally weak quarter, while product sales increased 11 percent over the same period a year ago. Quarterly operating income was $103 million compared to a loss of $55 million one year ago. Quarterly revenues increased to $1.006 billion, compared to $950 million for the second fiscal quarter of 2003.

Avaya chief executive Don Peterson said in an analysts' conference call that voice-over-Internet Protocol fueled enterprise customers' interest in new orders, though time-division multiplexed "systems remain an important part of enterprise telephony," Peterson added. Sales of IP telephony gateways grew 19 percent over the third quarter a year ago.

"The good news on enterprise spending is, we're starting to see some," Peterson said. "But we're certainly not in the [level as the] late '90s in terms of orders."

Financial earnings were announced hours after Avaya announced wireless telephony products, uniting cellular and wireless LAN networks using VoIP. Avaya jointly designed products with Motorola and Proxim. Executives said they hoped the products would soon add to Avaya's revenue stream.Avaya's most significant offshore contract in the past quarter was an enterprise telephony contract serving 12,000 employees at Toshiba Corp.'s headquarters in Japan.

Peterson also cited Avaya's pending acquisition of India's Tata Telecom, giving Avaya a new presence in India and other Asian markets when the deal closes in August. The company expects additional revenues of $13 million to $15 million quarterly from the Tata acquisition.