Thread regarding Avaya layoffs

China Huaxin

Will be bidding. Will merge with ALE. Alcatel-Lucent owns 15% of ALE and it is headquartered in France. Already competes favorably in global markets with no restrictions in the US. Good alignment with ALE product portfolio. Favorable brand recognition. Strong partner base (e.g. IBM).

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I believe at this point you are not submitting bids but are expressing an interest in the auction. Lots of competitors use this as an excuse to investigate the books of the business. When Ayaya bought Nortel Enterprise Solutions there were many that got the information but only a couple that showed up to bid.

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It's not true about the drop-dead date of April 18 to submit the bid. Potential bidders have until May 18 to submit their bids and disclose their financial standings. If bids are submitted after April 18, the bidders will not have access to the electronic data room to review the operational data for Networking.

I doubt that any potential buyers would do that therefore it's likely that we would know all the interested bidders by April 18 . The auction will be held May 23rd to decide the winner.

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Some background on China Huaxin and ALE. It's not as crazy (or as bad) as you think:

  • China Huaxin is, as its name suggests, Chinese. While Chinese companies have been on a spending spree in the US and in Europe, they haven't really been throwing around their M Unify embarking on a bold new R Genesys acquiring Echopass, SoundBite, and several others.

**THIS IS VERY INTERESTING ****

Speaking with industry analysts last week, Emelianoff said that it's China Huaxin's plan to double the size of ALU-E's business over the next five years, and that this cannot just be done simply with organic growth. Acquisitions will be needed, and ALU-E's new owners have the wherewithal to make that happen.

Before moving on, let's dwell a bit on what "double the size of ALU-E's business" means. Alcatel-Lucent has successfully obscured ALU-E's financial health by lumping the enterprise and government business together in financial statements. However, Bloomberg says the enterprise unit generated 764 million Euros ($1.4 billion) in revenues in 2012. On the call with analysts, Emelianoff said in 2013 there was about a 3% overall decrease in revenues, with its communications business down 6% and networking business up 3%. So that would make ALU-E a more or less 741 million Euro ($1 billion) business. According to Emelianoff, ALU-E had a positive operating profit in 2013, as opposed to a 12 million Euro operating loss in 2012, according to Bloomberg. This means (getting back to plans for doubling the business), China Huaxin and ALU-E are shooting for about a $2 billion company by 2018.

International expansion. There's also talk of China Huaxin helping ALU-E expand into new regions. China is an obvious choice given Cisco's difficulties there on the one hand and on the other China Huaxin's ownership of a sizable carrier networking systems developer and established systems integration business in the country. Emelianoff said ALU-E has already begun working with China Huaxin's SI arm: "We signed an agreement [with them] six months ago, and have already revved up the activity with them [which resulted in] some interesting revenue in Q4 last year."

Emelianoff, however, downplayed the notion of the acquisition leading specifically to an increased ALU-E presence in China, saying that he hopes the company will be in a better position to expand where it makes the most sense, be it APAC, MEA, or CALA.

Alcatel-Lucent still has skin in the game. Why is Alcatel-Lucent retaining 15% ownership in the enterprise group that it has long sought to be rid of? I assumed China Huaxin didn't want to pay the full $362 million, or that it wanted to keep Alcatel-Lucent interested and involved in the first potentially unpredictable years after ALU-E is spun off. Emelianoff, when asked about it, said that the 15% stake is to "retain a certain number of synergies we [Alcatel-Lucent and the enterprise group] have developed over the years, both on the technology side as well as the go-to-market side."

This makes sense since ALU-E has been involved in joint sales initiatives that continue to generate revenue. (The years-long University of Pennsylvania Medical Center project is a case in point.) And there are likely issues around patent ownership and ALU-E access to Bell Labs technology, the details of which ALU-E, Alcatel-Lucent, and China Huaxin still need to iron out.

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We will know soon enough who will be bidding. From the court docs:

Preliminary Bid Deadline: April 18, 2017, at 4:00 p.m. Eastern Time, as the last date by which potential bidders may deliver the bid documents required to participate in the Auction pursuant to the Bidding Procedures (the “Preliminary Bid Deadline”)

The actual auction is on May 23rd. There will likely be some objections. Oracle has given notice that they reserve the right to object to the license assignment portion of the Sale Agreement. They claim that assigning the licenses to the buyer is not permitted under the contract. Unless of course they were to buy the networking business...

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Huaxin own Alcatel-Lucent Enterprise, just like SilverLake etc own Avaya. They have the Omniswitch range of Enterprise and Datacenter fabric switches, based on SPB with good SDN API's, very similar to the Avaya fabric value props. R&D is in Calabasus.CA (ex Xylan). They have a similar market share to Avaya in terms of network infrastructure i.e. a niche player. They are cash rich, long term, industrial investors. If they were interested in Avaya networking, and I guess no one exept they know this until the auction, it would be for market share and channel growth, plus maybe some technology, talent and supply chain gains.

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Never heard of HuaXin, are they dog meat processing company ?

Total garbage!

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Rubbish. Total nonsense.

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