Avaya has announced plans to cut 3,000 employees as part of a continued restructuring plan that began when it was spun off from Lucent Technologies last year.
"Initially, we're targeting employees who are eligible with an early retirement program among our US-based personnel," said Avaya spokeswoman Paula Horii. The early-retirement phase could be followed by an incentive package for other employees who want to leave the company.
Ultimately, though, there will likely be involuntary layoffs, Horii said, which would include Avaya employees outside the US. There are approximately 28,000 Avaya employees worldwide, 23,600 of whom are in the US.
Tere Bracco, an analyst at Current Analysis, said the Avaya move "is not exactly shocking" and noted that it "would be premature to put too much emphasis on the action."
"With the immediate actions we are taking, including the elimination of at least 3,000 jobs and restructuring underperforming parts of our business, we expect to increase net income from ongoing operations 90 per cent to 100 per cent in 2001 compared to 2000," Avaya Chief Financial Officer Garry McGuire said in a statement. "The acceleration of restructuring also will allow us to meet our previously stated 2002 [earnings per share] goal of 35 per cent to 45 per cent growth, even with flat revenue."
Specifics of Avaya's restructuring will be revealed when it announces third-quarter earnings on July 26, Horii said.
In a separate announcement yesterday, Avaya said it had secured an $US8 million contract to provide equipment and applications for an IP network at Horizon Blue Cross Blue Shield.
The network will connect Horizon's headquarters and six contact centers, creating "a unified, virtual operation," Avaya said.
"In voice-over-IP products, Avaya is solid," said Bracco, "but they certainly don't have the landmark installations in that category that 3Com or Cisco have."
In LAN switching, Avaya is probably on a par with its competitors, Bracco said. But she noted that having to compete with network equipment powerhouses like Cisco Systems and Nortel Networks "isn't very comforting."