MUMBAI (Thomson Financial) - Standard & Poor's Ratings Services cut its
outlook on U.S. telecommunications gear maker Avaya Inc. to negative from
stable, reflecting recently weaker business conditions, lower profitability and
rising leverage.
S&P said that the ratings on the company including the 'B' corporate credit
rating and senior bank loan ratings remains unchanged reflecting its leveraged
balance sheet and significant competitive pressures, which more than offset its
solid position in the enterprise voice communications industry, and a good base
of recurring maintenance revenues.
S&P noted that industry sources report overall line shipments in the U.S. in
the March 2008 quarter were at the lowest level in three years, and were down 12
percent year over year. In addition, competitor Cisco Systems Inc. has gained
market share from Avaya.
The agency also said the industry volumes correlate closely with economic
cycles, and that there is a significant possibility that weak market conditions
will persist for several quarters.
tfn.newsdesk@thomson.com
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