Avaya Holdings seeks to raise $1 billion in IPO

AP News
Posted: Jun 09, 2011 6:48 PM
Avaya Holdings seeks to raise $1 billion in IPO

The owner of Avaya, a maker of corporate phone and communications systems, hopes to raise $1 billion with a return to the stock market after nearly four years as a privately held company.

The initial public offering documents filed Thursday by Avaya Holdings Corp. come amid growing interest among investors looking for fresh opportunities to buy high-tech stocks.

The enthusiasm has raised worries that investors are getting carried away and paying too much in a throwback to the dot-com bubble of the late 1990s.

Avaya's roots date back to that time. It was spun off from Lucent Technologies in 2000, partly because its business of selling corporate phone systems wasn't a big moneymaker.

Thursday's filing disclosed Avaya has lost more than $3.6 billion since it was taken private in 2007 in an $8.3 billion buyout. The engineers of that deal, Silver Lake and TPG, own a 72 percent stake in Avaya, according to Thursday's filing.

In the past year, Avaya has introduced more than 60 new products and services to boost its revenue. Through the six months ending March 31, Avaya's revenue totaled $2.76 billion, a 16 percent increase from the same period last year. But its losses have widened to $615 million in the current year from $421 million the previous year.

Despite those setbacks, Avaya is aiming high in its IPO. If it hits its $1 billion target, it would rank as the sixth highest amount of money raised in an IPO so far this year, according to research firm Renaissance Capital.

Avaya, which is based in Basking Ridge, will determine the price for its IPO shares after its investment bankers gauge the demand. That will also influence how many shares are sold in the offering.

The company has more than 18,900 employees, down from about 30,000 in 2000. It says it has more than 400,000 customers, including most of the biggest U.S. corporations

Although it is seeking more money, Avaya's IPO seems unlikely to create as big a stir on Wall Street as last month's stock market debut of LinkedIn Corp., which runs a website that acts as a Rolodex for people looking to advance their careers.

LinkedIn shares more than doubled in their first day of trading to leave the company with a $9 billion market value _ the highest for an Internet IPO since Google Inc. went public seven years ago. The stock has plunged by 24 percent since the first-day frenzy, but still remains well above its IPO price. It closed Thursday at $72.01.

Online coupon seller Groupon Inc. is expected to make an even bigger splash when its stock begins trading late this summer or early fall. The company filed its IPO papers a week ago.

Internet music streaming service Pandora Media Inc. will provide another measure of investor demand for tech stocks next week when it's expected to complete its IPO.