2009 was a momentous year for Nortel - finally imploding under a combination of extreme debt, acquisition challenges, Asian competition and the remnants of a financial scandal from years past. Recently I analyzed the acquisition of Nortel's enterprise unit by Avaya and further reported how we can expect to hear the details of the merger and roadmap on January 19th, 2010, one day before ITEXPO kicks off in Miami.
While I am sure there will be vibrant discussion at the conference regarding Avaya's roadmap, it should be noted that Mitel too will be a major topic of discussion at the event as it plans an IPO this year. You may recall the IPO plans of the company were shelved in 2006 - many thought this was as a result of a poor showing in the public markets by Vonage - but company execs explained the reason for the pull back had more to do with the fact they were able to bid for and acquire Inter-Tel and didn't need the public markets to consummate the transaction.
The contrast between the fortunes of Mitel and Nortel won't be lost on many industry veterans - both telecom companies excelled due to technology leadership but both had an understated approach to customer and market communication meaning PR and marketing. This is not uncommon - the world is awash in tech companies who use an engineering approach to marketing.
The company plans on using the money generated from an IPO - they hope for as much as $230 million, to repay its revolving credit line, loans and to make acquisitions. Interestingly, Mitel Networks has recorded net losses every year from 2001 until 2007 and was profitable in 2008. In 2009 - by all accounts a very tough year, the company increased sales by 6.2%. It is worth noting that the company's fiscal year ends April 30th and even though sales were up, earnings declined resulting in a net loss of $193.5 million as opposed to net income of $12.6 million in the prior fiscal year. This loss was due to a goodwill charge of $284.5 associated with purchasing Inter-Tel. This sort of charge is generally seen when assets which have decreased in value are realized.
Billionaire, serial entrepreneur, tech visionary and 4GWE/ITEXPO keynoter Sir Terry Matthews is a Mitel cofounder and currently has a 35% equity stake in the company and is in an interesting position to use the cash from this transaction to acquire one of the incubator companies he is running in Mitel's HQ.
