Tag Archive for Bankruptcy

Is Toshiba Screwed?

http://www.toshiba.com/tai/The tortuous auction of Toshiba’s coveted NAND chip fab has finally started to wrap up. You would think that after over nine months of bidding and 2 trillion yen ($17.7 billion) the victors would like to gloat. A win of that size would be celebrated, but nooo….

The winning partners lead by venture capitalist Bain Capital and Apple can’t even agree on when to hold a presser to announce their purchase. The consortium had planned a presser for 09-28-2017, which was abruptly cancelled just minutes before it was due to begin according to reports. Reuters reports that “…the consortium could not form a consensus on whether to brief media.”

PangeaOne wrinkle may be that Apple (AAPL) has demanded new terms on its chip supply for the new iPhones. In addition to Apple, Bain’s consortium “Pangea” includes Japan’s Hoya Corporation, South Korea’s SK Hynix, and U.S. investors Kingston Technology (KINS), Seagate Technology (STX) and Dell Technologies Capital.- all of which want access to NAND technology.

Under the deal, Toshiba will have 40.2 percent of voting rights in the chip unit and Hoya will own 9.9 percent. The four U.S. tech firms will not have voting rights.

Western DigitalBesides internal strife, the sale also faces legal challenges from Western Digital (WDC), Toshiba’s chip venture partner and rejected suitor, which is seeking an injunction to block any deal that does not have its consent.

Western Digital, one of world’s leading makers of hard disk drives, paid some $16 billion last year to acquire SanDisk, Toshiba’s chip joint venture partner since 2000. It sees chips as a key pillar of growth and is desperate to keep the business out of the hands of rival chip makers.

Bain has also announced that it plans to take Pangea public by 2020.

Avaya Goes Chapter 11

Avaya Goes Chapter 11-Updated- 03-07-17 As predicted Avaya spun off its networking business. The lucky winner is Extreme. The presser from Extreme is here.

In one of the worst kept secrets in tech, Avaya has finally declared bankruptcy. The Santa Clara, CA-based communications company filed for chapter 11 protection on January 19th 2017 in the U.S. Bankruptcy Court for the Southern District of New York. Reports are that Avaya faced an end of January deadline to reach agreements with creditors to address its $6.3 billion debt or potentially default.

Avaya Goes Chapter 11The company’s presser announcing the bankruptcy characterizes the decision to seek Chapter 11 as a necessary re-do on deals made a decade ago. The company was spun off from Lucent, a former AT&T unit, in 2000. Avaya went private in 2007 when private equity firms Silver Lake Partners and the Texas Pacific Group took over the firm for $8.2 billion. Avaya was set up as a leveraged buyout – loaded with debt. At the time the new owners said going private would help Avaya to accelerate product development. In 2009 Avaya scooped up the remnants of Nortel for $900m.

The Nortel acquisition added Ethernet switching and VoIP to Avaya’s portfolio. While the move added needed hardware to the Avaya portfolio the rest of the tech world started the shift towards software-as-a-service and the cloud. Avaya was not able to digest Nortel while taking on Cisco, Microsoft and the cloud at the same time.

$6.3 billion debtAvaya was both late with VoIP and Unified Communications. Neither Microsoft nor Cisco were competitors in the TDM/PBX era. Cisco joined the race with VoIP and Microsoft then came along with Unified Communications. Both have tremendous enterprise penetration and brand recognition.

The pressure forced Avaya to consider selling it’s crown jewel, its contact center products to Genesys in 2016, in the hope it would raise some cash. When the deal with Genesys fell through, Avaya decided to file for bankruptcy. Avaya CEO Kevin Kennedy said in a statement, “…chapter 11 is the best path forward at this time.

In order to keep the lights on during the reorganization, the company has secured a $725 million loan underwritten by Citibank.

As part of its debt load, Avaya owes its pensioners $1.7 billion unfunded pension liabilities. According to NoJitter Avaya will honor it obligations to maintain and continue the pension (as did GM in its reorganization).

Chapter 11 only impacts Avaya’s United States operations. In the rest of the world the company is moving to assure customers and stakeholders that it’s business as usual.

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My experience is that the Avaya IP Office product is way over-priced, even in a bid environment. Why would anyone buy an Avaya Ethernet switch or access point when you can get a Cisco or an HP?

So what is to become of Avaya? One likely case is that all of business units will be sold off to satisfy the creditors. The only thing left of Avaya will be a service organization to care for the huge installed base of orphaned Nortel and Avaya systems.

I know people are already getting calls from Cisco about replacing Avaya.

Ralph Bach has been in IT for fifteen years and has blogged from his Bach Seat about IT, careers and anything else that catches his attention since 2005. You can follow me at Facebook and Twitter. Email the Bach Seat here.

Another Cloud Goes Bust

Another Cloud Goes BustOn April Fools day, another cloud provider shuttered is operations without any warning. FierceBigData reports that OpenStack cloud vendor Nebula shut-down operations on April 01, 2015 without ever a heads-up.

Not againThe firm, founded in 2011 by former NASA CTO, Chris Kemp, appeared to have it under control. According to CSC, they seemed to have customers for its Nebula Cloud Controller, an appliance that integrated up to forty x86 white-box servers into a turnkey OpenStack cloud. Customers of Nebula have included Lockheed Martin, Shutterfly, Sandia National Laboratories, and Genentech.

The company also had a fat war-chest of almost $40 million from top-tier VCs. Silicon Angle reports that Nebula managed to burn $38.5 million in venture capital prior to its closure, from investors including Webb Investment Network, Comcast Ventures, Scott McNealy, William Hearts II, Kleiner Perkins Caufield & Byers, Highland Capital Partners, and others.

Despite its well-stocked war-chest, customer support ended immediately. The defunct company told its former customers turn to “OpenStack products from vendors including Red HatIBM (IBM), HP (HPQ) and others.”

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stability of cloud providersThe stability of cloud providers is really questionable. I have covered other cloud provider implosions; MegaCloud, Nirvanix and Code Spaces.

In the end it is as simple as the author says the moral of the story is “that you should look very carefully at your partners … you must be able to count on your system integrator, value-added reseller, whoever, to be there when you need them. 

 

Ralph Bach has been in IT for fifteen years and has blogged from his Bach Seat about IT, careers and anything else that catches his attention since 2005. You can follow me at Facebook and Twitter. Email the Bach Seat here.

Fate of the American Auto Industry

Fate of the American Auto IndustryNow that everyone is an expert on Detroit and focused on what is happening in Motown, here is an infographic from BizBrain that traces the fate of the Motor City‘s namesake industry the Automobile.

The Life and Death (and Life) of the U.S. Auto Industry
Source: The Life and Death (and Life) of the U.S. Auto Industry

What do you thiky?

  • Will the Detroit three continue to thrive?
  • What will Detroit look like if it emerges from bankruptcy?
Related articles

Nortel Declares Bankruptcy

Nortel Declares BankruptcyUpdated 02-14-12 The Wall Street Journal reported that for nearly a decade before its collapse, Chinese hackers had widespread access to Nortel’s corporate computer network.

According to the article, the hackers used seven passwords stolen from top Nortel executives, including the chief executive, the suspected Chinese hackers, penetrated Nortel’s computers at least as far back as 2000 and over the years downloaded technical papers, research-and-development reports, business plans, employee emails and other documents.

Updated 03-12-09 WirelessWeek is citing The Wall Street Journal in reporting that Nortel is in talks to sell its core wireless equipment business as well as a separate unit that builds telecom systems for offices, according to anonymous sources in the WSJ.

The WSJ reported that Nortel is talking to Nokia Siemens Networks, to sell its wireless business. Avaya and Siemens Enterprise Communications, a joint venture of Siemens and technology private equity firm Gores Group, are interested in the company’s enterprise unit.  Cisco Systems reportedly looked at the enterprise unit but wasn’t expected to bid. Nortel declined to comment.

Nortel Declares Bankruptcy113 year old Canadian technology firm Nortel filed for Chapter 11 bankruptcy today, after its loss in the third quarter ballooned to $3.41 billion and 1,300 people had to be let go. CEO and President Mike Zafirovski wrote on the company’s Website. “Most importantly, Nortel is still very much in business.”

Next steps for the former Northern Telecom may include selling various business units or receiving a capital investment as a way to go private, According to Avi Cohen, managing partner at analyst firm Avian Securities, on TheStreet.com “The most likely bidders for Nortel’s assets are Ericsson, Huawei (002502), Nokia Siemens, and Cisco (CSCO). We believe Alcatel-Lucent (ALU) and Motorola are less likely bidders because they are struggling with their own challenges and would have a hard time financing such a purchase.”

UBS analyst Maynard Um speculated on CED that an acquisition of Nortel by Huawei would be a possible outcome giving the Chinese firm a significant increase in market access in North America. However this scenario may run into trouble with the Committee on Foreign Investment in the U.S. (CFIUS) regulations.

 

Ralph Bach has been in IT for fifteen years and has blogged from his Bach Seat about IT, careers and anything else that catches his attention since 2005. You can follow me at Facebook and Twitter. Email the Bach Seat here.