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Avaya Holdings Plunges on 'Going Concern' - Assessing Options

Stock Markets Aug 09, 2022 20:58
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By Sam Boughedda

Investing.com - Avaya Holdings (NYSE:AVYA) stock plunged 45% on Tuesday after the company reported selected additional preliminary results, missing earnings and revenue consensus estimates.

The technology company reported fiscal third-quarter EPS of $0.24, $0.02 worse than the analyst estimate of $0.26, with revenue for the quarter coming in at $577 million versus the consensus estimate of $660.12 million.

The company said its preliminary results for the quarter reflect operational and executional shortcomings that were amplified against the backdrop of a volatile economic environment.

In addition, Avaya's results included a "going concern" warning, stating the company completed a series of financing transactions in July 2022, intended to provide financing to fund the repurchase or repayment of the convertible notes, which mature in June 2023. They said they are currently engaging with advisors to assess the options with respect to the convertible notes, but there "can be no assurance as to the certainty of the outcome" of the assessment and as a result, in addition to its revenue decline in Q3, and the negative impact of significant operating losses on its cash balance, it has determined that there is "substantial doubt" about its ability to continue as a going concern.

"We are taking aggressive actions to right-size Avaya's cost structure to align with our contractual, recurring revenue business model. We have already begun operationalizing our recently announced savings initiatives and expect to identify additional areas as our work continues," said Alan Masarek, President and CEO of Avaya.

Following the preliminary earnings release, The Wall Street Journal, citing people familiar with the matter, reported that Avaya has hired the law firm, Kirkland & Ellis, to evaluate its options.

 

Avaya Holdings Plunges on 'Going Concern' - Assessing Options
 

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