Avaya — Smith Barney Citigroup 2004 Technology Conference
17 slides from Avaya's conference presentation, Sep 7, 2004
Slide 1: Smith Barney Citigroup 2004 Technology Conference
Smith Barney Citigroup 2004 Technology Conference Garry McGuire Chief Financial Officer & SVP Corporate Development September 7, 2004 © 2004 Avaya Inc. All rights reserved
Slide 2: Forward Looking Statement
Forward Looking Statement The use of words, such as “may”, “might”, “will”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “intends”, “future”, “potential” or “continue”, the negative of these terms and other comparable terminology are intended to identify forward- looking sta
Slide 3: Avaya
Avaya • Delivering on commitments – Business results – Financial strategy • Strong value proposition – Customer focus • Positioned for technology transformation – Large installed base – Best in class technology – Focusing on professional services • Investing for future – R&D – Alliances – Corporate
Slide 4: Delivering on Our Commitments
Delivering on Our Commitments Total Revenue ($M) Product Revenue ($M) Service Revenue ($M) 1,016 929 506 510 9.4% 474 455 11.2% 7.6% Q3 FY03 Q3 FY04 Q3 FY03 Q3 FY04 Q3 FY03 Q3 FY04 Gross Margin Operating Income ($M) EPS $0.12 92 48.0% 43.5% 4.5% $0.13 88 $(0.01) 4 Q3 FY03 Q3 FY04 Q3 FY03 Q3 FY04 Q3
Slide 5: Delivering on Our Commitments
Delivering on Our Commitments Debt ($M) Cash ($M) 993 1,523 41.2% 584 80.7% 843 Q3 FY03 Q3 FY04 Q3 FY03 Q3 FY04 Net Cash ($M) Operating Cash Flow 939 215 1,089 203 (150) 12 Q3 FY03 Q3 FY04 Q3 FY03 Q3 FY04 5
Slide 6: Strong Value Proposition
Strong Value Proposition Rich Communications Applications Avaya Unique Integrated Applications Proposition Whole Greater than Customer Sum of the Parts Avaya Avaya Systems Services Open and Standards-based Most Comprehensive In- Technology Depth Services Capability 6
Slide 7: Strong Value Proposition: Meeting Needs Across the Organization
Strong Value Proposition Meeting Needs Across the Organization CMO Sales Revenue “Our main priority is on winning business back and growing our top line.” 1 Expense “Even in growth markets, cost reduction is a top-of-mind issue. We have to reduce overhead while maximizing efficiency” 2 Risk CIO “Our
Slide 8: Positioned for Technology Transformation: World-Class IP Telephony Technology
Positioned for Technology Transformation World-Class IP Telephony Technology Value Proposition Scalability Security & Reliability • Migration choices • 12K IP endpoints • Hardened Linux servers • Over 700 features per server • Advanced encryption • Investment • 300K busy hour • IP and TDM redundancy
Slide 9: Global IP Telephony Opportunity & Transition Cycle
Positioned for Technology Transformation Global IP Telephony Opportunity & Transition Cycle 500 440M 415M 400 Global IP Enterprise Proliferation Telephony 300 Installed Base IP Total Lines (M) Acceptance 200 IP Early Adoption 100 ny 8% IP l epho % 30% IP e 7 IP T GR 5 CA 0 Source: Gartner Group, MZA
Slide 10: Worldwide IP Telephony Leadership
Positioned for Technology Transformation Worldwide IP Telephony Leadership Worldwide IP Telephony Market Share – 2Q CY04 (Lines Shipped) 30% 24% 19% Market Share 20% 15% 12% 10% 6% 0% Avaya Cisco Nortel Alcatel Siemens Source: Synergy Research Group 10
Slide 11: Enterprises Run on Communication Applications
Enterprises Run on Communication Applications Main Facility Home Contact Workers Customer Experience Center • Transparent access to one enterprise • Consistent response and service levels Business Imperatives • Integrated business processes across dispersed people, knowledge, systems, partners, work
Slide 12: Focusing on Expanded Services Offerings
Focusing on Expanded Services Offerings Unlocking the Power of Communications 12
Slide 13: Investing for the Future
Investing for the Future • Continue to invest 8-10% of Revenue in R&D (14-18% of Product Revenue) • Use Strategic Alliances to expand market opportunities • Use M&A to supplement R&D: - enhance distribution - expand global service & channel opportunities - extend presence in growth markets - fill pr
Slide 14: Alliances and Partnerships
Investing for the Future Alliances and Partnerships CY2001 CY2002 CY2003 CY2004 14
Slide 15: Recent Transactions
Investing for the Future Recent Transactions 10/2/03: Purchased assets from Vista Technologies 2/2/04: Completed sale of Connectivity to Commscope Q2 FY04: Acquired Expanets 8/4/04: Increased stake in Tata Telecom 8/3/04: Announced Spectel acquisition Q1 Q2 Q3 Q4 FY04 FY04 FY04 FY04 15
Slide 16: Avaya
Avaya • Delivering on commitments • Market in early stages of technology transition • Continually investing for the future • Unique business model to enhance customer value proposition • Well positioned for profitable growth 16
Slide 17: Smith Barney Citigroup 2004 Technology Conference
Smith Barney Citigroup 2004 Technology Conference Garry McGuire Chief Financial Officer & SVP Corporate Development September 7, 2004 © 2004 Avaya Inc. All rights reserved
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