There have been countless errant comments about Avaya's journey to the inevitable pending Bankruptcy. Let's dispell the ill-informed myths:
Myth #1: 'My Group is Self-Funded and Will be Safe'
Grossly inaccurate. You sell Avayas goods and services. Your sales # s exceed your salaries and operating costs. You believe that means you are self funded. NOPE. You sell goods that Avaya doesn't fully own. Goods that were developed and brought to market by BORROWED money that Avaya is still paying for. So, theoretically, you are paying .60-.70 of each dollar BACK to the creditors. Do you still believe you are "self funded"?
Myth #2 : Investors = Shareholders
Investors/Creditors/Debt Holders/Lenders/Shareholders are not one in the same. In some cases Creditors/Debt Holders can also be Investors. They are not equity owners, except in a backwards sort of way where they can take control when Avaya defaults. You will soon learn that in the most unfortunate of ways in real time.
Shareholders are equity holders, if there is equity to be had. Shareholders come in the form of Institutional Investors, Individual Private Citizens buying common stock on the public market OR Avaya Employees and Directors. (Meaning, Common Stock is different from ESPP and RSUs, and should be respected as such). Notably, there is actually a page on the website and a department dedicated to Investor Relations. This is specific to shareholders (institutional & individual) and must follow regulations and process set forth by NYSE & SEC, NOT debt holders.
Example: Apollo is a Debt Holder. (Via betting on Avaya in a not positive way), NOT an Investor.
The shareholders you've been sparring with and making fun of on social media are not the bad guys. What they want is what any Avaya employee should want. Apollo is the bad guy. Sadly, it's too late for y'all to grasp that in time to make a difference. The shareholders gave it their all. They fought harder for Avaya to not succumb to Apollo manipulation more than any one group. It's pitiful that vocal social media employees disdained them.
{I recall when our esteemed marketing superhero posted something along the lines of 'take that haters' when the stock bounced back over a dollar. Ironically, that pop was due to the response of Theo King acquiring over a 5% stake in Avaya. The sustained above $1 was only due to shareholders lining up to support Theo's move. Yet the marketing dude cherry picked when he wanted to use the stock price as a gauge for assessing Avayas sustainability. When it was good he'd pat himself on the back. When it's bad he'd insult the shareholders as being people who were not doing the hard work to keep the lights on}.
Myth #3 : Investors Only Care to Short Avaya to drive it into the ground to make money
Shorting is a strategy in the market, just as the ridiculous "Experience Economy" was a failed strategy the marketing team doubled-down on last year. It is a gamble and may work or may not work, same as Avayas failed marketing. When an org is publicly traded, you want to inspire hope and encourage faith by shareholders. They can make a critical difference in the overall financial health of the organization that goes way beyond their objective to make money. Positive shareholder sentiment is critical. They should be a key audience for any sophisticated marketing message (More on that when we address Market Cap/Credit Rating)
Myth #4: If I didn't work in Finance, I have nothing to do with the Financials of the Company
#1 Rule: If you cash a paycheck, you are accountable for the financials of the company. You are responsible for following the Code of Conduct. No, you don't have the same rights to speak freely as individual shareholders do. Every action you take must be considerate of the financial well-being of the organization. Your personal brand may be considered a conflict of interest to the objectives and goals of the organization. How you behave and present yourself can be judged. Most concerning MISS across the board is the fact that Avayas revenue is primarily collected by regulated customers. Not by cool .com hoodie wearing hipsters. But by organizations that have strict rules for their own employees. Every Avaya employee should present themselves following the same rules their revenue generating clients must follow. What client wants to fight to keep Avaya (every single customer has to justify to their superiors as to why they shouldn't run from the Avaya trainwreck right now--dont fool yourself otherwise) if they observe Avaya employees not understanding their workplace culture?
Myth #5: Shareholders are meaningless because they don't show up to do the work
This one is the BIGGEST possible Sins of an employee of a publicly traded org. Let's begin by discussing Market Cap & Enterprise Value.
Market Cap -- {Yes...the metric that has spiraled AVYA from $3b to $45m in 3 yrs.} Total value of a publicly traded company's outstanding common shares owned by stockholders. Market capitalization is equal to the market price per common share multiplied by the number of common shares outstanding
While market cap measures the value of a company’s equity, enterprise value measures the total value of the business, including its debt obligations assets and cash and is a more accurate measure of real worth
Shareholders buy common shares. This contributes to the Market Cap valuation. The higher the valuation, the better terms on debt. Possibly a better credit rating. Avayans missed the mark on how they treated shareholders which contributed directly to market cap. The C Suite has certainly failed everyone by playing a dangerous game of misleading the Enterprise Value. The mis-presentation of Enterprise Value was unnecessary and a result of pure and simple greed. Karma is the result.
PS. We will all miss the opportunity to inspire shareholders when private equity takes control.
Myth #6: 'Avaya filed Chapter 11 in 2017 & Look what we did since then. No Big Deal.'
WRONG WRONG WRONG WRONG WRONG!
First of all, Chapter 22 is NOT Chapter 11. You can only lose your virginity once. The market is unforgiving. Brand value is gone. Trust for your word is lost.
Second, it is not 2018. Competitive market has changed significantly. Period.
Most critically, Free $$ is NO MORE! Avaya emerged from Chapter11 in late 2017 ONLY because money was cheap. Borrowing was easy. In fact,
Avaya was operating under an era of unprecedented lending.
https://www.forbes.com/sites/mayrarodriguezvalladares/2021/08/10/the-us-leveraged-finance-market-is-at-a-record-3-trillion/
Why did tech overhire the last several years? Why are they all cutting now? It's not b/c inflation. Inflation/recession are headline buzzwords. It's because money was so cheap to borrow, (yes, even the giants like MSFT & AMZN borrow $), they figured WHY NOT? Why not use it. Cushion our workforce. Build our bench strength. Invest in R&D. M&A. No more. No more cheap, nearly free money available to borrow.
This is NOT 2018!!!