According to the CEO for ScanSource, Mike Baur, some of the larger enterprises working with Avaya have had to delay their plans for expansions and upgrades, because of the vendor's position with Chapter 11 bankruptcy. Recently, ScanSource saw a fall in their Avaya-related sales for larger enterprise businesses, simply because of the uncertainty plaguing the market since Avaya filed for bankruptcy.
Although Baur noted that he feels the current issue is a "pause", rather than a change, it's worth noting that Avaya's activities are having pretty big impacts on the sector. For ScanSource, Avaya is one of three vendors providing a significant percentage of the company's sales for last year.
What's Happening with Avaya?
Avaya first filed for Chapter 11 bankruptcy protection during January, and announced its plans in March to sell its networking sector onto "Extreme" networks. ScanSource's CEO noted that company is familiar with Extreme, and they believe that if the acquisition is successful, the distributor will be able to transition it's networking solutions to Extreme, and continue providing the same services without much disruption.
Of course, Avaya's main business focuses on the contact centre. Networking partners only came to Avaya later, and Baur noted that they contribute only a small piece of the overall business pie.
The Present and Future of ScanSource
According to ScanSource, the sales for the third quarter saw an increase of around 1.9% from the previous year, raising to $813.5 million. That means that they missed their prediction of $833.1 million. Additionally, earnings fell 11.4% per share, from $0.54 last year, to $0.49 this year. Additionally, on a non-GAAP basis, earnings fell to $16.4 million, or around $0.65 per share.
