DURHAM – Shares in technology and cloud services firm Avaya plunged early Tuesday after the Durham-based firm warned it may not survive a plunge in revenue and operating losses while delaying a full publication of its quarterly financial report.

The company also is setting aside $11 million to cover costs associated with layoffs. although none have as yet been formally announced.

“The waiting game is the worst. I’m a ‘rip the band-aid off’ kind of guy and I’d prefer to just get it over with than having to wait and guess when it’s going to happen and if I’ll be among those notified,” a worker posted at TheLayoff.com. “The wait is only increasing our stress levels for no good reason. Just get on with it already.

The news comes just days after Avaya (NYSE: AVYA) replace its CEO and a recent round of new debt financing has come under fire from investors. Avaya moved its headquarters to the Triangle in 2020 from California. It has some 8,000 employees spread across numerous operations.

Cloud firm Avaya CEO to be ‘removed,’ Voya vet to replace him; stock plunges

The Wall Street Journal added to the company’s misery with a report today that a deal to bolster the company’s finances had collapsed.

“Avaya’s Collapsing Debt Deal Hits Clients of Goldman, JPMorgan,” the Journal reported. “Cloud-communications company cut earnings forecast by more than 60% a few weeks after borrowing $600 million from the banks’ investment clients.”

Last week, Bloomberg News reported that “Avaya, Goldman, JPMorgan Face Lender Ire After Loan’s Collapse.”

Internal investigation

Its board, meanwhile, has launched an internal investigation of the company, citing a letter from a whistleblower. However, the sepecifics of the investigation were not disclosed.

In a preliminary financial report, Avaya reported that revenues for the current quarter declined to $577 million, well under the company’s previous expectations.

Avaya logo

The news about the company’s future emerged in an SEC filing:

“As a result of the foregoing, in addition to the Company’s decline in revenues during the third quarter, which represented substantially lower revenues than previous Company expectations, and the negative impact of significant operating losses on the Company’s cash balance in the year to date, as of the date of this release, the Company has determined that there is substantial doubt about the Company’s ability to continue as a going concern.”

Avaya also disclosed in that same filing the internal investigaion:

“The Audit Committee of the Company’s Board of Directors has commenced an internal investigation to review the circumstances surrounding the Company’s financial results for the quarter ended June 30, 2022.

“Furthermore, and separately, the Audit Committee has also commenced an internal investigation to review matters related to a whistleblower letter.

“The Audit Committee has engaged outside counsel to assist in the investigations and has notified the Securities and Exchange Commission (the “SEC”) and the Company’s external auditor, PricewaterhouseCoopers LLP, of its investigations. As the investigations are not complete, the Audit Committee requires additional time to complete its initial assessments. As a result, the Company requires additional time to complete its review of its financial statements and finalize its disclosures in the Form 10-Q. Accordingly, the Company will be unable to file its Form 10-Q on or prior to the required filing date and has filed a Form 12b-25 Notification of Late Filing for its Quarterly Report on
Form 10-Q for the Quarter Ended June 30, 2022.”

CEO update

In a statement, AVaya’s new CEO Alan Masarek said the company’s “preliminary financial results for the quarter reflect operational and executional shortcomings, amplified against the backdrop of a volatile economic environment. 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.”

Avaya has already said it planned to cut costs by some $200 million.

“Although we have a lot of work to do, we have a tremendous foundation to build on as we become a stronger, leaner, more agile, and innovative organization,” Masarek said

Avaya, now with HQ in Triangle, to bring in $600M in funding