Avaya Profit Surges 52 Percent in Fourth Quarter

Avaya on Tuesday posted a 52 percent surge in fourth-quarter income and beat Wall Street expectations, helped by strong sales and a higher gross margin during the period.

The company also reported its first yearly profit since spinning off from Lucent Technologies in 2000, sending shares climbing 3.1 percent, or 42 cents, to $13.85 in after-hours activity on the New York Stock Exchange.

In the latest quarter, Avaya's income was $100 million, or 21 cents per share, topping the average estimate of 18 cents from analysts surveyed by Thomson First Call. The company earned $66 million, or 15 cents a share, in the year-ago period.

Total revenue grew 11 percent to $1.08 billion from $971 million a year earlier, with product sales rising 14 percent to $565 million while service revenue increased 7 percent to $511 million.

All three of the company's business groups were profitable throughout fiscal 2004.Avaya said quarterly revenue includes $14 million from reversing reserves for sales returns and allowances because of improved operations over the past year. The reversal benefited quarterly earnings by 2 cents per share.

For the year, Avaya posted earnings of $296 million, or 64 cents per share, up from a loss of $88 million, or 23 cents, in 2003. Sales jumped 7 percent to $4.07 billion, with product sales up 9 percent to $2.05 billion and service revenue growing 5 percent to $2.02 billion. Analysts expected a profit of 49 cents per share on sales of $4.05 billion in 2004.

Avaya has faced losses each of the three years since separating from Lucent in 2000. The company designs and sells networking products to combine voice and data functions, and also offers customer management services.

Shares of Avaya ended the day up 1.6 percent, or 21 cents at $13.43.