Avaya Braced for $26m Hit as Job Cuts Begin

Cuts designed to save as much as $250m

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Avaya job cuts
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Published: September 7, 2022

Tom Wright

Managing Editor

Avaya expects to be hit by $26m in costs as it begins cutting jobs.

The struggling UC-CC firm has not revealed how many roles it expects to axe but has said it plans to save between $225m and $250m annually.

In an SEC filing, Avaya said:

“The Company estimates that it will incur approximately $23 million to $26 million in pre-tax restructuring charges, all of which are expected to be in the form of cash-based expenditures and substantially all of which are expected to be related to employee severance and other termination benefits.”

The Story So Far

Avaya’s share price has been on the slide for some time amid disappointing quarterly results. This culminated in the acrimonious sacking of CEO and long-time servant Jim Chirico at the end of July.

Chirico was widely praised for guiding Avaya out of its last turbulent period when it entered and exited Chapter 11 before listing on the New York Stock Exchange in 2018. Avaya then waxed lyrical about its transformation into a cloud-first company, and early on, it appeared this transformation was going well. Delays to a number of large deals, however, were headwinds against this evolution.

The vendor published some daunting numbers at the same time as the chief exec’s ousting. The disclosing of complete Q3 figures was cancelled, but Avaya admitted that sales could miss sales guidance of up to $580m by as much as $125m. Alongside this, it revealed plans to cut costs by up to $225m.

The issue is complicated further because Avaya had raised hundreds of millions of dollars in secured financing before revealing its quarter struggle, which has irked investors. The firm revealed it is currently investing a whistleblower letter to aggravate matters further.

New Man at the Helm

Amid all the noise, former Vonage boss Alan Masarek was appointed CEO and tasked with guiding Avaya out of troubled waters. His influence appears to have been calming, with the firm’s share price rising around 250 percent in a little over a month.

Masarek recently sat down with UC Today to discuss his plans for the vendor, which look likely to include simplifying its go-to-market strategy.

The new chief exec commented on the unspecific job cuts, claiming that he wants the Avaya workforce to do “less with less” through simplification.

“We’re trying to eliminate areas of duplication,” he said.

“You might have similar functions staffed in IT, in services, and in the software products. It just lends itself to being brought together.

“In the past, it was just too overly siloed, you had redundant costs, and those silos worked less effectively together.”

 

 

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