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Mitel to Get Toshiba UC&C Assets

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Mitel to Get Toshiba UC&C Assets

May 12, 2017
By Paula Bernier
Executive Editor, TMC

It’s not an easy time to be in the unified communications and collaboration space. As in many areas of technology, the players are changing and morphing quickly in an effort to address their own internal challenges as well as outside forces.

Avaya in January filed for Chapter 11 bankruptcy protection. In February, Mitel divested its mobile unit – less than two years after its $560 million purchase of Mavenir Systems (News - Alert) and at a time when so many other companies are talking about their mobile-first strategies.

And this week Toshiba, which earlier this year announced plans to get out the unified communications systems business (among other businesses), announced it has signed a memorandum of understanding to transfer certain assets to Mitel (News - Alert). Terms of the deal, which is expected to close early this summer, were not disclosed.

“Toshiba sales have been declining for some time, and the company has become far less visible and innovative than many of its competitors,” Dave Michels of Talking Pointz wrote in March. He added that Toshiba (News - Alert) has “an excellent PBX” that competes with small business systems from companies such as Mitel, NEC, and Panasonic.

“Channels were told that the last orders must be placed by May 22,” Phil Edholm (News - Alert), writing for Unified Communications Strategies in March, commented. “While Toshiba is committing to support under current contracts they are openly encouraging customers to move to third-party support.”

This exit of the UC market is part of a global restructuring at Toshiba. And Fox Business earlier this week reported that Toshiba Corp.’s business partners have been bracing for a possible bankruptcy filing by the company. The company reportedly expected to record a net loss of $8.83 billion for the year ended March 2017 following the Chapter 11 filing by Westinghouse Electric Co., Toshiba’s U.S. nuclear unit.

But these are just the latest chapters in a larger story that has seen years of struggle and significant change at Toshiba. The company in mid 2015 saw big leadership changes after an accounting scandal, and in late 2015 Toshiba announced plans to stop selling laptops.

As for Mitel, although it moved to purchase some of the Toshiba UC&C assets and has talked about its role as a consolidator in the unified communications space, as noted above, not all of the company’s acquisitions have worked out as planned. And the company recently revealed plans to scale back its workforce by 10 percent between this month and the end of the year.

Mitel in early May reported what it called “solid March quarter revenues and earnings per share.” The company said its recurring cloud seats grew by 45,000 during the quarter. And Mitel recently has made significant moves to better position itself financially. During the quarter it paid down $364 million in debt, secured $500 million in new credit facilities (including a $150 million term loan and a $350 million revolving credit facility, both of which mature in 2022) to lower its interest rates, and initiated a stock buyback program.

Edited by Alicia Young

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