Avaya — Fourth Annual JMP Securities Research Conference (March 2005)
16 slides from Avaya's conference presentation, Mar 2, 2005
Slide 1: Fourth Annual JMP Securities Research Conference
Fourth Annual JMP Securities Research Conference March 2, 2005
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 stat
Slide 3: Building Shareholder Value: Profitable Growth
Building Shareholder Value Profitable Growth 3
Slide 4: Avaya Strategy to Build Shareholder Value
Avaya Strategy to Build Shareholder Value Leverage Incumbency and Technology 440M 408M hony p Tele 69% IP GR CA 30% IP 4% IP 2003 2007 Global Enterprise Telephony Installed Base Total Lines (M) Technology Transition Drives Growth Opportunity Source: Avaya analysis based on independent industry analy
Slide 5: Strategic Differentiation & Integrated Value Proposition
Strategic Differentiation & Integrated Value Proposition North America Telephony Base • Clear focus on the enterprise 120 108M 110M • Voice experience and expertise 100 • Significant installed base 80 • Global services organization IP 60 Telephony • Comprehensive applications CAGR 57% portfolio 40 4
Slide 6: Tenovis Fills a Strategic Need for Avaya
Tenovis Fills a Strategic Need for Avaya EMEA Telephony Base • Leading European incumbent vendor with significant size, scale 169M 180 160M and footprint 160 • Opportunity to upgrade installed 140 base and win new customers 120 100 • Combination offers market IP presence throughout EMEA 80 Telephony
Slide 7: FY2005 Update
FY2005 Update
Slide 8: Q1 FY2005 Results: Market Summary
Q1 FY2005 Results Market Summary • Maintained #1 position in market share in IP Telephony for the fourth consecutive quarter at 25%* • Total large enterprise telephony line shipments rose by 9% over the year ago quarter • Large enterprise IP line shipments were up more than 50% over the year ago qua
Slide 9: Q1 FY2005 Results: Financial Summary
Q1 FY2005 Results Financial Summary • Revenues grew 18% quarter over quarter including the impact of acquisitions – Product sales up 15% – Rental and managed services up 60% – Services up 15% • Revenue from GCS segment up 23% • International revenues were up 77.7% including acquisitions quarter over
Slide 10: Q1 FY2005 Key Performance Drivers
Q1 FY2005 Key Performance Drivers Revenue Growth • Business is growing organically Total Revenue Product Sales Q1 FY04 Q1 FY05 Q1 FY04 Q1 FY05 Reported Revenue $971 $1,148 $482 $554 Adjustments Tenovis & Spectel (129) (39) AGC* (5) (2) Expanets* (22) (28) (8) 0 Currency Impact (12) (6) Adjusted Reve
Slide 11: Product Sales Growth
Product Sales Growth Rate of Growth Should Accelerate Throughout the Year 14.0% 12.0% 10.0% 8.0% 12.5%** 6.0% 7.0%* 11.2% 4.0% 5.0% 5.1% 2.0% 0.0% Q1 Q2 Q3 Q4 FY2004 FY2005 * Product sales growth excluding acquisitions and currency impact (previous slide) ** Q4 FY04 excludes reversal of $8M of reser
Slide 12: Growing Product Gross Margins
Growing Product Gross Margins 60.0% 59.0% 58.0% 57.0% 56.0% 55.8% 57.6%* 55.0% 54.0% 53.0% 53.9% 54.0% 52.0% 51.0% 52.3% 50.0% Q1 Q2 Q3 Q4 FY2004 FY2005 * Q4 FY04 excludes the reversal of $8M of reserve for sales returns and allowances and $1M of associated costs 12
Slide 13: FY2005 Tenovis EPS Impact
FY2005 Tenovis EPS Impact Q1 Q2* Q3* Q4* Total* Tenovis EPS Impact (0.014) (0.07) (0.03 – 0.04) 0.02 – 0.03 (0.10) Significant Items • Amortization of intangibles (non-cash) • Integration expenses • Vacation accrual • Foreign currency impact • Cost and revenue synergies * Estimates 13
Slide 14: Avaya FY05 Key Performance Drivers
Avaya FY05 Key Performance Drivers FY04 With Allocation Original FY05 Update Changes Goals Total 4,055 Growth of approximately Growth of at least Revenue 25% to 27% 28% Gross 46.8% Solid improvement No change Margin for the year Operating 39.1% Modest increase No change Expense Operating 311 Growth
Slide 15: Focused on Achieving Our Annual Goals
Focused on Achieving Our Annual Goals • Building momentum in key areas that drive our performance and ability to build value… • The transition in the enterprise telephony market is moving ahead and is broadening into other key geographic areas. • We’re well positioned in our core market and now have
Slide 16: Fourth Annual JMP Securities Research Conference
Fourth Annual JMP Securities Research Conference March 2, 2005
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