Avaya lays off 2,500 workers in restructuring move

For the third time since June 2001, networking company Avaya is undergoing a financial restructuring as it works to cope with the...

For the third time since June 2001, networking company Avaya is undergoing a financial restructuring as it works to cope with the stagnant IT economy.

Avaya said it would cut 2,500 jobs and take a restructuring charge of about $150m (£96m) in its financial fourth quarter ending 30 September.

About $68m (£44m) of the charge will cover the costs of the 2,500 layoffs, while about $65m (£42m) will pay for consolidation of facilities and lease terminations. About $15m (£9.6m) will pay for other costs.

The restructuring will begin immediately, according to Lynn Newman, a spokeswoman for the company, which was created after being spun off from Lucent Technologies.

Avaya also conducted restructurings in March and last summer, Newman said, as the company tried to cut costs to match revenue during the challenging economic times that have affected much of the IT industry. The problem, she said, is that customers have cut or delayed their IT spending and IT vendors are continuing to feel the effects.

About 21,600 people work for Avaya today, meaning the company will have about 19,000 workers after the latest layoffs take effect. The restructuring will save the business about $300m (£192m) in this fiscal year.

Last week, Avaya warned of the upcoming restructuring and layoffs when it presented its results for its third fiscal quarter, which ended 30 June. The company posted a $37m (£23.7m) net loss, compared with net income of $24m for the same period last year.

Third-quarter revenue fell to $1.22bn (£780m), nearly 29% less than the $1.71bn it posted in the third quarter a year ago.

Avaya's parent company, Lucent, posted its ninth consecutive quarterly loss last week and announced the layoff of another 7,000 employees in a continuing effort to rein in costs.

The telecommunications equipment maker reported a net loss of $7.91bn (£5.1bn) for its third financial quarter which ended 30 June, compared with a $3.24bn net loss in the same period a year ago.

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