Tag Archive for: Mitel

Mitel to buy ShoreTel

Mitel is at it again!   On July 27, Mitel announced it was purchasing ShoreTel in an all cash transaction.   This follows the announcement on May 11th that Mitel signed a Memorandum of Understanding to transfer assets and support obligations, including existing inventory, from Toshiba.

Mitel is based in Canada (Ottawa) and has annual revenues of about $850 million.

The premise PBX market continues to shrink and as the Cloud telephony business ramps up, there was not enough runway for the likes of Shoretel and Toshiba to make the transition.

Combining the two companies catapults Mitel to number two in the Unified Communications as a Service (UCaaS) market, according to the company.

With the stroke of a pen, Mitel now has almost doubled its UCaaS revenue to $263 million, and there will be other efficiencies achieved by combining the two companies with similar markets.

“This is a very natural combination that enables us to continue to consolidate the industry and take advantage of cost synergy opportunities while adding new technologies and significant cloud growth to our business,” Mitel CEO Rich McBee said in a statement.

$1.3 Bil in Revenue:  The combined companies will have approximately $1.3 Billion in annual revenue.  In addition when combined will have 3200 channel partners and 4200 employees worldwide.

Financial highlights of the transaction include:

  • Combined sales of $1.3 billion*
  • Increases Mitel’s total recurring revenue to 39% of total revenue*
  • More than doubles Mitel’s UCaaS revenue to $263 million*
  • Significant synergy opportunity targeted at $60M in annual run rate spend expected to be achieved over two years

The deal is still subject to regulatory and shareholder review before it can close.

The combined company will be headquartered in Ottawa, Canada, and will operate as Mitel. Rich McBee, Mitel’s Chief Executive Officer, will lead the combined organization. Steve Spooner, Mitel’s Chief Financial Officer, will also continue in that role.

Mitel to buy Toshiba’s Telecom division

In blog #34 (March ’17) we posted that Toshiba was shutting down its Telecom division headquartered in Irvine CA.  At the time of the announcement it was a pure shut down… Toshiba did not try to sell their Telecommunications division but simply decided to shut it down.

The premise PBX market continues to shrink and as the Cloud telephony business ramps up, there was not enough runway for Toshiba to make the transition.  Toshiba sales have been declining for some time and the company has become far less visible and innovative than many of its competitors. Toshiba made an excellent PBX that competed with small business systems from the likes of Panasonic, Mitel, and NEC.

Toshiba had been losing some of its pull in the industry, it was still a shocking decision considering that the company has about a 3% market share in the U.S.

Fast forward to May ’17 and we learn that Mitel is picking up the parts from the Toshiba telecommunications business.

A little about Mitel:  They are based in Canada (Ottawa) and have annual revenues of about $850 million.

On May 3rd Mitel announced Q1 financial results for the quarter ended March 31, 2017.

Mitel announced they too are taking proactive cost reduction actions to align its operating expenses with its current business needs. This includes a workforce reduction of approximately 10% expected to be completed between now and the end of the year.

Financial Highlights from Continuing Operations

  Q1 2016
in millions
(except per share data)
Q1 2017   Historical
Currency
GAAP Revenues $223.1   $233.0
GAAP Net Income (Loss) ($19.7)   ($11.8)
Non-GAAP Net Income2 $10.9 $10.5
GAAP EPS – basic ($0.16)   ($0.10)

Mitel Business Highlights this quarter included:

  • Recurring cloud seats grew by 45,000 during the quarter and now stand at 588,000
  • Working with a large service provider, Mitel is transitioning 10,000 employees of a second large European-based auto manufacturer from premise to a cloud-based Unified Communications solution.
  • A Midwestern US-based furniture retailer with more than 65 locations and an on-line presence selected MiCloud Enterprise and MiCloud Contact Center to connect all locations, centralize answering, and manage their advanced contact center needs including callback in queue and multi-media requirements.  The system is all hosted by Mitel. 

Mitel, on Thursday May 11th signed a Memorandum of Understanding to transfer assets and support obligations, including existing inventory, from Toshiba to Mitel. The agreement also includes a transition of product and services agreements from Toshiba customers to Mitel.

Mitel expects to close on the Toshiba deal this summer.

Besides transferring their existing inventory, Mitel will also be transferring all of their service and maintenance contracts to Mitel, so that Toshiba customers continue to have support as they move forward.

Terms of the deal were not disclosed.

Mitel made its last acquisition in 2015 with the purchase of cloud-based UC provider Mavenir. The vendor made a bid to buy Polycom last year, although the deal fell through.

Toshiba Shuts Down Telecom Division

Interesting that Toshiba did not try to sell their Telecommunications division but simply decided to shut it down.   As the premise PBX market continues to shrink and as the Cloud telephony business ramps up, maybe there were just no buyers for the smaller players?

Founded in 1975, Toshiba Telecommunication Systems Division (TSD) was a division of Toshiba America Information Systems Inc. (TAIS) – a subsidiary of Toshiba Corporation.

Headquartered in Irvine, California, TSD is a manufacturer of IP business telephone systems, designed for small to medium-sized businesses and larger enterprises with multiple locations. Its ‘Strata CIX IP’ business telephone systems and related applications are sold by a network of Authorized Toshiba Dealers throughout the United States and Latin America.

Dealers were informed via letter on March 21, 2017 that “Toshiba Corporation has deemed it necessary to wind-down its Telecommunication Systems Division (TSD) business starting immediately.” Toshiba has decided to shut down its Telecommunication System Division (TSD) and associated hosting platform services.

According to a memo from Brian Metherell, VP & GM of Toshiba America Information Systems, TSD:

“As part of its continuing global restructuring, Toshiba Corporate has deemed it necessary to wind-down our Telecommunication Systems Division (TSD) business starting immediately.

“Dealers can submit orders through May 22, 2017 subject to inventory availability and purchase order acceptance.”

Toshiba sales have been declining for some time and the company has become far less visible and innovative than many of its competitors. Toshiba made an excellent PBX that competed with small business systems from the likes of Panasonic, Mitel, and NEC.

Toshiba Canada also will be announcing the wind-down of its telecommunications business, and TSD will no longer be selling in Mexico.  TSD vowed to support dealers in all warranty and maintenance obligations to customers.

It is a surprise that a once dominate market continues to see contraction.

Enterprise PBX Market Continues Slide Despite Improving Economic Conditions

Campbell, CALIFORNIA —Technology market research firm Infonetics Research, now part of IHS Inc. (NYSE: IHS), reported in 2015 that the global enterprise telephony and unified communications (UC) market closed down 4 percent in 2014, to $8.7 billion, as businesses continue to hold off new purchases and upgrades of PBX equipment despite improving worldwide economic conditions.  The trend appears to continue thru all of 2015 as well.

The overall market decline masks the health of the evolving UC applications segment, which jumped 20 percent in 2014, energized by the demand for tools to increase workforce productivity.

The data comes from Infonetics’ fourth quarter 2014 (4Q14) and year-end Enterprise Unified Communications Voice Equipment market share, size and forecast report, which tracks PBX phone systems, voice over IP gateways, UC applications and IP phones.

“The enterprise telephony market continues to be tough. Just as we see one area begin to improve, it’s offset by slowdowns in geographies or market segments. Underscoring the declines are not only slowing businesses purchases but also competitive pricing, which has created unpredictable swings,” said Diane Myers, principal analyst for VoIP, UC, and IMS at Infonetics Research, now part of IHS. “The move to the cloud is having an impact in certain markets, particularly North America.”
MORE ENTERPRISE TELEPHONY MARKET HIGHLIGHTS

  • Globally, PBX revenue, including TDM (time-division multiplexing) and IP PBXs, dropped 6 percent in 2014
  • Vendors remain in a battle to gain customers and hold onto existing ones as enterprises migrate to IP and UC solutions: In 2014, the top four PBX revenue market share leaders were, in alphabetical order, Avaya, Cisco, Mitel and NEC
  • Microsoft continues to see strong sales on the UC front, solidifying its position atop the unified communications market share leaderboard

Mitel announces definitive agreement to acquire Polycom

Polycom logoCombines global technology leaders to create a complete communications and collaboration portfolio and an enhanced ability to deliver profitable growth

  • Creates new $2.5 billion revenue company with scale and differentiated portfolio to expand in evolving enterprise communications market
  • Delivers attractive value for Mitel and Polycom’s shareholders with significant operating leverage and synergy opportunities
  • Polycom brand to be retained
  • Results in a significant reduction in net debt leverage ratio
  • Transaction expected to be accretive to Mitel in 2017 

OTTAWA and SAN JOSE, Calif., April 15, 2016 (GLOBE NEWSWIRE) — Mitel (Nasdaq:MITL) (TSX:MNW) and Polycom(Nasdaq:PLCM), today announced that they have entered into a definitive merger agreement in which Mitel will acquire all of the outstanding shares of Polycom common stock in a cash and stock transaction valued at approximately $1.96 billion. Under the terms of the agreement, Polycom stockholders will be entitled to $3.12 in cash and 1.31 Mitel common shares for each share of Polycom common stock, or $13.68 based on the closing price of a Mitel common share on April 13, 2016. The transaction represented a 22% premium to Polycom shareholders based on Mitel’s and Polycom’s “unaffected” share prices as of April 5, 2016 and is expected to close in the third quarter of 2016, subject to shareholder and regulatory approvals and other customary closing conditions.

New company with shared vision for seamless communications and collaboration

The combined company will be headquartered in Ottawa, Canada, and will operate under the Mitel name while maintaining Polycom’s strong global brand. Richard McBee, Mitel’s Chief Executive Officer will lead the combined organization. Steve Spooner, Mitel’s Chief Financial Officer, will also continue in that role. Once merged, the combined company will have a global workforce of approximately 7,700 employees.

“Mitel has a simple vision – to provide seamless communications and collaboration to customers. To bring that vision to life we are methodically putting the puzzle pieces in place to provide a seamless customer experience across any device and any environment,” said Mitel CEO Rich McBee. “Polycom is one of the most respected brands in the world and is synonymous with the high quality and innovative conference and video capabilities that are now the norm of everyday collaboration. Together with industry-leading voice communications from Mitel, the combined company will have the talent and technology needed to truly deliver integrated solutions to businesses and service providers across enterprise, mobile and cloud environments.”

“Together, Polycom and Mitel expect to drive meaningful value for our shareholders, customers, partners and employees around the world,” said Peter Leav, President and CEO of Polycom. “We look forward to working closely with the Mitel team to ensure a smooth transition and continued innovation to bring the workplace of the future to our customers.”

Global scale and strategic scope provide key customer benefits

The combined global company will offer customers an integrated technology experience supported by an impressive ecosystem of partners. Key market positions include:

  • #1 in business cloud communications (i)
  • #1 in IP/PBX extensions in Europe (ii)
  • #1 in conference phones (iii)
  • #1 in Open SIP sets (iv)
  • #2 in video conferencing (v)
  • #2 in installed audio (vi)
  • Installed customer base in more than 82% of Fortune 500 companies
  • Deep product integration with Microsoft solutions
  • Mobile deployments in 47 of the world’s top 50 economies
  • Combined portfolio of more than 2,100 patents and more than 500 patents pending
  • Global presence across five continents with approximately 7,700 employees worldwide

Enhanced platform expected to deliver profitable growth with opportunities for synergies and significant debt deleveraging

The combined company will have a significantly larger financial platform with the scope, scale and operating leverage needed to strategically expand in an actively evolving market.

Transaction Details

The transaction is expected to close in the third quarter of this year, subject to stockholder approval by Polycom and Mitel, receipt of regulatory approval in certain jurisdictions and other customary closing conditions. Following the closing of the transaction, former Polycom shareholders are expected to hold approximately 60% and current Mitel shareholders are expected to hold approximately 40% of the outstanding Mitel common shares.

Source:  Mitel Website

Voice systems and telepresence are hurting, but vendors see growth in other areas

January 11, 2016 | By Chris Talbot

Voice and telepresence are both suffering as vendor revenue in those areas continues to decline, but other enterprise infrastructure areas are growing. New research from Synergy Research Group shows that wireless LAN infrastructure products are growing the fastest – something that comes as little surprise as more enterprises roll out Wi-Fi deployments with the latest 802.11 technologies.

The Synergy report shows that revenue for WLAN products grew by about five percent in the last four quarters, whereas Ethernet switches grew at four percent, data center servers were a little above two percent, unified communications applications grew about four percent, routers were barely above zero percent, voice was down two percent and telepresence was down almost five percent.

It’s good news and bad news for the vendors involved. Cisco leads six out of the seven market categories. The exception is data center servers, where Hewlett Packard Enterprise reigns. HPE came in second in the Ethernet switches, routers and WLAN categories (the last is thanks to its 2015 acquisition of Aruba Networks).

“Cisco remains in a league of its own, accounting for a third of the market and gaining market share in the only segment where it is not the current leader,” said Jeremy Duke, founder and chief analyst at Synergy Research Group, in a statement. “Across these hardware-oriented product areas HPE is the only broad-based challenger to Cisco’s dominance and it has been steadily increasing its share of the market. However, what we are now seeing is the strong growth of cloud, hosted and collaborative software solutions, which is introducing competition from non-traditional areas and causing market boundaries to blur.”

The other number two vendors include – Dell in data center servers, Avaya in voice systems, Microsoft in UC applications and Polycom in telepresence.

But there are some up-and-comers gaining market share in each category, including Microsoft in UC apps and voice systems, Arista Networks in Ethernet switching, Mitel in voice systems, HPE in WLAN, Huawei in telepresence, Lenovo in data center servers and Cisco in data center servers.

Whether this could mean significant changes in market share and dominant vendors in the seven categories over the next several years is anybody’s guess. It seems unlikely there will be a repeat of the huge shake-up in networking that happened in the late 1990s, but transitions could happen.

Despite Improving Economic Conditions Enterprise PBX Market Continues Slide

Campbell, CA (March 10, 2015)—Technology market research firm Infonetics Research, now part of IHS Inc. (NYSE: IHS), today reported that the global enterprise telephony and unified communications (UC) market closed down 4 percent in 2014, to $8.7 billion, as businesses continue to hold off new purchases and upgrades of PBX equipment despite improving worldwide economic conditions.

Infonetics chart
The overall market decline masks the health of the evolving UC applications segment, which jumped 20 percent in 2014, energized by the demand for tools to increase workforce productivity.

The data comes from Infonetics’ fourth quarter 2014 (4Q14) and year-end Enterprise Unified Communications Voice Equipment market share, size and forecast report, which tracks PBX phone systems, voice over IP gateways, UC applications and IP phones.

“The enterprise telephony market continues to be tough. Just as we see one area begin to improve, it’s offset by slowdowns in geographies or market segments. Underscoring the declines are not only slowing businesses purchases but also competitive pricing, which has created unpredictable swings,” said Diane Myers, principal analyst for VoIP, UC, and IMS at Infonetics Research, now part of IHS. “The move to the cloud is having an impact in certain markets, particularly North America.”

MORE ENTERPRISE TELEPHONY MARKET HIGHLIGHTS

  • Globally, PBX revenue, including TDM (time-division multiplexing) and IP PBXs, dropped 6 percent in 2014 from 2013, and dipped 1 percent in 4Q14 from 4Q13
  • PBX line shipments declined 3 percent in 2014 from 2013; In 4Q14, line shipments were up 4 percent year-over-year, driven by pure IP PBX
  • Vendors remain in a battle to gain customers and hold onto existing ones as enterprises migrate to IP and UC solutions: In 2014, the top four PBX revenue market share leaders were, in alphabetical order, Avaya, Cisco, Miteland NEC

Microsoft continues to see strong sales on the UC front, solidifying its position atop the unified communications market share leaderboard

Enterprise Telephony Market To Shrink 20 Percent; Cisco, Avaya Will Grow

By Mark Haranas on July 31, 2015

The enterprise telephony market will shrink about 20 percent within the next few years as enterprises move their IT dollars away from premise solutions toward the cloud, although vendors like Cisco and Avaya continue to see growth through on-premise solutions.

The market is expected to decline from an estimated $10 billion in 2015 to $8 billion by 2019, with its peak hitting $16 billion in 2007, according to Dell’Oro analyst Alan Weckel.

“Having premise equipment is less and less important. Those functions are just going to be integrated into other equipment or come from the cloud,” said Weckel in an interview with CRN. “Although on the enterprise side as you get to scale, the ability of having thousands of connections to the cloud for voice really doesn’t make sense. So the enterprise market will have a different transition.”

Dell’Oro is still predicting IP phone growth over the next five years from both PBX vendors like Cisco, Avaya and Alcatel-Lucent Enterprise, as well as from third parties, such as Polycom and Grandstream.

Weckel said enterprises will pick some cloud pieces to use, but, ultimately, the call control will stay premise-based, because for companies with thousands of employees having everything from the cloud “just doesn’t make sense.”

“Cloud makes sense for a lot of SMBs, and the large middle-size companies, but when it gets to thousands of employees, it makes sense to have premise-based solutions,” said Weckel.

“The large vendors, a lot of them are growing through acquisitions and consolidation … If you look at Cisco, they were looking at selling to cloud providers to grow. So using Cisco equipment for the cloud offering, that will be a strategy vendors will use to expand the market — so not selling to the premise but selling to the cloud,” he said.

Analysts said enterprise vendors must create more unique cloud offerings in the telephony market by both selling equipment to support cloud build-outs and by creating stand-alone cloud offerings.

“If you’re a vendor and you don’t have a cloud strategy today, it will be too late,” said Zeus Kerravala, principal analyst at Westminster, Mass.-based ZK Research. “Now it comes down to how aggressively a vendor would be willing to cannibalize its premises-based business in favor of the cloud, how they compensate the channel and how they transition partners.”

“If channel partners do not have a plan in place today for cloud, they will be obsolete in five years,” he said.

Kerravala said ShoreTel has its own cloud offering and cloud partner program that allow the channel to sell its suite of cloud-based VoIP services, while Avaya is enabling its cloud partners to build a cloud rather than offer one directly.

“What’s important is that the vendor plays in the cloud-collaboration market regardless of whether they choose to build, enable others to build, or both,” said Kerravala.

Jamie Wood, executive vice president at Avatel, a Brandon, Fla.-based Avaya partner, said Avaya is ahead of the game with the Avaya Collaborative Cloud open platform solution for partners and customers.

“They provide the options to build, deliver, use, or enhance an organization’s cloud communication services and applications,” said Wood. “[The platform] was designed to support the transition and lives seamlessly alongside the on-premise solutions that organizations retain.”

Wood said the move to cloud communications will be a gradual evolution, and opportunities for solution providers are biggest in the midmarket.

Analysts said solution providers need to expand their level of expertise in cloud or face extinction.

Russ Zielezinski, chief operating officer at Advanced Telecommunications, a ShoreTel and Mitel partner based in Naperville, Ill., said 2015 has been the biggest market shift to the cloud ever.

“It’s been a challenge for us, who were founded as premise-based providers … It has impacted the premise market, and I can say we’ve seen it affect our numbers too,” said Zielezinski. “But for survival, you need to adopt a new cloud-recurring revenue model.”

Zielezinski said solution providers need to become cloud-focused and have the proper amount of technical staff on board to support all the different applications.

Organizations are selecting cloud over premise because companies are more comfortable with using OpEx dollars compared to spending a large sum of money up front for the equipment, according to Weckel.

“So the cloud allows them to pay on a monthly basis, which is just easier from a consumption point of view,” said Weckel.

In addition, cloud solutions are easier for SMBs because they don’t have to overprovision their systems, and it is also typically easier to manage.

“There’s a lot of opportunities there if the VARs and channel expand into adjacent areas around cloud,” said Weckel.

“It’s more than just voice. [Customers] are probably thinking about updating their entire networking, maybe going with a cloud-managed solution there like a Meraki solution for wireless and switching. Maybe they’re thinking about some cloud computing whether it’s Amazon or Rackspace — there’s a lot of opportunity to rewrite applications, write new applications and sort of become the trusted consultant to the customer.”

Mitel Takes Aim at Avaya With ShoreTel Bid

Anyone thinking about signing a deal with ShoreTel for unified communications gear might want to take a closer look now that Mitel has made public its hopes to buy the company.

Mitel says it’s prepared to pay 24% over the price last Friday of ShoreTel stock (about $540 million), but ShoreTel says no and won’t negotiate, according to a letter Mitel’s CEO wrote to the chairman of ShoreTel. Despite the rebuff, Mitel plans to persist and that means ShoreTel customers should be vigilant.

At the very least, businesses weighing whether to buy ShoreTel gear should find out the likely impact of a merger, says Ken Landoline, a principal analyst with Current Analysis. “Beat up your channel about what does this mean for me?” he says.

Likely it won’t be anything bad because Mitel wouldn’t want to alienate ShoreTel customers by shutting down products they have invested in and perhaps hope to rely on for years, says Jeremy Duke, CEO of Synergy Research group. “They’d be on thin ice,” he says, if they did that. “The market is too competitive. They have to keep the customer base happy.”

An unhappy customer base would leave the Mitel/ShoreTel entity open to poaching by the two big unified communications leaders Cisco and Avaya, he says.

Still, potential ShoreTel customers should make sure that the terms of ongoing support for products are spelled out in whatever contracts they sign, says Landoline, so they know they won’t be stranded if the company is acquired, and its product roadmap changes.

By making public Mitel’s offer to buy the company is putting pressure on ShoreTel’s board by bringing the proposal directly to the attention of shareholders. “[W]e have a proven track record of successfully completing and integrating transactions and are firmly committed to bringing the benefits of a combined organization to our respective customers, employees and other stakeholders,” says Mitel CEO Richard McBee in an Oct. 20 letter to Charles Kissner, chairman of the ShoreTel board.

If Mitel succeeds, it would move the combined company up the ladder of market leaders by revenue in unified communications – at least in the U.S., says Duke. If U.S. on-premises gear plus unified-communications as a service market share for Q1 2014 are compared Cisco (28.7%), Avaya (13.8%), ShoreTel (8.7%) and Mitel (7.1%) rank numbers one, two, three and four respectively, according to Duke. Post merger, that would put Mitel/ShoreTel in second place and bump Avaya third.

He says the prime motivation for the deal may be to boost Mitel’s share of the U.S. market, similar to the way its acquisition of Aastra in January gave it the number 1 ranking in unified communications for Western Europe, Duke says. The Aastra deal also pushed Mitel into the realm of billion-dollar companies by revenue.

Author:  Tim Greene @ Networkworld

Trends in UC and PBX

Unified communications market up 27% from a year ago; PBX market continues to take hits

—Market research firm Infonetics Research released its 1st quarter 2014 (1Q14) Enterprise Unified Communications and Voice Equipment report, which tracks PBX phone systems, voice over IP gateways, unified communications (UC) applications, and IP phones.

ENTERPRISE TELEPHONY AND UC MARKET HIGHLIGHTS

  • Worldwide PBX revenue (TDM, hybrid, and pure IP) is down 8% in 1Q14 from 1Q13, and down 8% from 4Q13
  • The unified communications (UC) segment is the lone bright spot, racking up a 27% worldwide revenue increase in 1Q14 from the same period a year ago
  • Although there are pockets of growth in parts of Europe and South America, along with strength down market, none of it is large enough to lift the overall PBX market
  • CALA (the Caribbean and Latin America) is the only region to notch positive year-over-year PBX revenue growth in 1Q14, as economic activity picked up in anticipation of the World Cup
  • Cisco, Avaya, and NEC are the PBX market share leaders; Mitel cracked the top 4 as a result of its merger with Aastra Microsoft, who leads the UC market, is the only vendor in the enterprise telephony segment to post year-over-year revenue growth in 1Q14

ANALYST NOTE
“The enterprise telephony market continues to struggle as businesses hold off new PBX purchases and invest instead in unified communications (UC) applications. Purchase cycles are getting longer, and competitive activity is putting pressure on the market with pricing all over the map,” notes Diane Myers, principal analyst for VoIP, UC, and IMS at Infonetics Research.