Avaya (AV) shares hopped Monday as the company's third-quarter profit beat expectations.

The Basking Ridge, N.J.-based office phone specialist earned $194 million, or 40 cents per diluted share, after a $123 million gain from tax settlements and credits.

Excluding the one-time events, Avaya's adjusted net income was 14 cents a share on sales of $1.24 billion in the quarter ended last month. Those numbers compare with a 13-cent profit on $1.2 billion in revenue in the quarter ended in March, and earnings of 16 cents on sales of $1 billion in the year-ago period. Analysts were looking for earnings of 12 cents on $1.2 billion in revenue, according to Reuters Research.

The former

Lucent

( LU) business-phone spinoff is facing increased challenges from Internet protocol-based office phone systems made by outfits like

Cisco

(CSCO) - Get Report

.

Looking ahead, the company says it expects sales growth and cost-cutting will lead to improved earnings in the current quarter ending in September. Avaya did not give any detailed guidance.

Avaya shares rose $1, or 10%, to $10.25 in after-hours trading Monday.