CommScope, one of the world's largest providers of coaxial cable for businesses and telephone companies, agreed to buy Avaya's Connectivity Solutions division for $210 million in cash, with the balance in stock and convertible notes, according to a Monday announcement from both companies.
The move is meant to help Avaya concentrate on its Internet Protocol (IP) phone business, according to a statement from Avaya Chief Executive Don Peterson. "The sale of the Connectivity Solutions group is another important step in Avaya's evolution as we continue to sharply focus on our core IP telephony and services businesses," he added in the statement.
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The sale is the latest sign of the hypercompetitive atmosphere now surrounding the sale of voice over Internet Protocol (VoIP) equipment and phone-calling plans. Networking equipment makers and phone service providers are diving headfirst into the industry, which already accounts for 10 percent of all telephone calls. Within the next decade, it's expected that a majority of telephone calls will use VoIP, a form of dialing over the Internet that's cheaper than using a telephone company's privately owned network.
Avaya is unloading a division that in 2003 generated about $3 million in income after sales of more than $542 million, according to the statement.
Also Monday, Hickory, N.C.-based CommScope reported a third-quarter profit of $1.1 million, or two cents per share, compared with a net loss of $19.6 million, or 32 cents per share, in the same period a year ago. It said the turn to black was driven by strong sales to both wireless and landline phone companies.