Avaya (AV) got a ringing endorsement Thursday from an analyst who says we shall soon see a long-awaited shift in phone technology.
J.P. Morgan Chase's Ehud Gelblum started coverage on Avaya with a buy rating. Heralding the arrival of the voice-over-the-Net revolution, Gelblum sees a new growth opportunity for the old office switchboard maker.
The analyst says the simple conversion of the ubiquitous Avaya office PBX phone gives the profitless gearmaker a leg up on rival
A spinoff of
( LU) humdrum business phone-system unit, Avaya has seen its sales drop by half since they peaked at $8.3 billion in 1999. But that trend is expected to finally turn around next year as more companies move toward the so-called convergence of phone and Internet.
While Cisco has been the leader among computer networkers vying for a slice of the office phone-traffic business, observers including Gelblum note that Cisco's solution is still typically seen as radical, expensive and alien by old-line office telecom managers. By Gelblum's estimates, Avaya's more modest modifications to its current phone systems offer a 40% discount to Cisco's gear.
Shares of Avaya rose 36 cents, or 3%, to $12.72 in midday trading. The Basking Ridge, N.J., gearmaker is expected to post its first profit this century on sales of $1 billion when it reports earnings on Oct. 21.