Avaya shares plunge 21% on 3Q loss as company attempts to fix ‘operational and executional shortcomings’

Avaya Holdings Corp. AVYA, +17.23% shares plunged 21.4% in premarket trading Tuesday after the tech company reported a third-quarter loss amid attempts to fix what new CEO Alan Masarek describes as “operational and executional shortcomings” set against the backdrop of a volatile economy. The company’s stock closed Monday’s session up 17.2% at $1.12. Avaya reported third-quarter sales of $577 million, down 20% year-over-year in constant currency. Last month Avaya announced its preliminary third-quarter results, forecasting sales of $575 million to $580 million, below its previous guidance. Analysts surveyed by FactSet forecast third-quarter revenue of $604 million. On Tuesday the company reported a net loss of $1.408 billion and a net loss of $16.27 a share, which includes non-cash impairment charges of $1,272 billion, after net income of $43 million and earnings of 43 cents a share in the prior year’s quarter. On an adjusted basis, Avaya reported a net loss of $20 million and a net loss of 24 cents a share, after net income of $73 million and earnings of 75 cents a share in the prior year’s quarter. Analysts surveyed by FactSet were looking for net income of $5 million and a net loss of $1.21 a share, or earnings of 5 cents a share on an adjusted basis. When it announced its preliminary results last month Avaya also announced cost-cutting measures and the appointment of Alan Masarek as its new president and CEO. “Our preliminary financial results for the quarter reflect operational and executional shortcomings, amplified against the backdrop of a volatile economic environment,” said Masarek, in a statement released on Tuesday. “We are taking aggressive actions to right-size Avaya’s cost structure to align with our contractual, recurring revenue business model.” Avaya shares have fallen 94.3% year to date, compared with the S&P 500 Index’s SPX, -0.12% decline of 13.1%. Of five analysts surveyed by FactSet, one has a buy rating on Avaya, three have a hold rating and two have a sell rating.

Source: finance.yahoo.com