It’s been almost two months since Glenayre Technologies Inc. said it would discontinue its paging infrastructure operations-a business Glenayre has been an integral part of for nearly 40 years, a business it helped create. It is a move company executives said was inevitable and one they are hoping to finish with quickly so they can move ahead into a promising new business-unified communications.
“It was certainly a difficult decision, not the kind of thing that anyone would take lightly,” said Joellyn Sargent, Glenayre’s new vice president of marketing. “We had a lot of good employees-we had a forced reduction of about 55 percent of the company, so that’s challenging-but at the same time we’re very excited about looking forward to expanding on the potential we see in the unified communications space.”
In late May, Glenayre announced a massive restructuring plan that included eliminating 700 positions and completely dismantling its wireless messaging infrastructure division. At the time, the company said the restructuring moves could cost up to $250 million, accounting for severance pay, lost revenue from discontinued operations and drops in asset values.
Glenayre blamed the move on the rapidly deteriorating paging market, which in the past year has forced several major consolidations and bankruptcies. As a result, Glenayre’s infrastructure revenue declined more than 27 percent last year compared with 1999. Glenayre said it expects its infrastructure business to continue to decline a staggering 70 percent this year compared with last year.
Sargent said Glenayre knew its time in the paging infrastructure business was finite. Paging carriers only would need infrastructure products for so long, she said, and Glenayre couldn’t expect to remain in the business and continue to grow.
“The writing was on the wall-with the consolidation of the carriers-that the market was really shrinking,” Sargent said. “Paging networks are pretty much built out, so there’s not a lot of market for new infrastructure.”
Glenayre knew it had to get out of the business-it just didn’t know it would have to do it so soon.
“The fact is … the paging infrastructure market has declined a lot more rapidly than we initially expected that it would,” Sargent said. “It was inevitable that we would get out of that portion of our business eventually, but it was sort of accelerated. At the same time, looking at the economic climate and the environment for telecommunications as a whole, we said, `We’ve really go to make some decisions about where to stake our claim going forward: Where are the growth opportunities relative to our expertise and our core business?’ “
Glenayre knew it needed to expand into something else, and the hunt was on. The company experimented with various wireless devices and other operations, but when company executives began researching unified messaging, they knew they had landed on something big.
“Looking at all those things, we really made the decision that enhanced services and unified communications was much more future-oriented and a better place for us to be,” Sargent said.
Glenayre can claim to be an old player in the unified communication business. In 1989, the company took its first step into the unified communications business through an old voicemail product.
“It first evolved out of our voicemail platform and enhanced services platform that we’ve been offering out of Atlanta for about 10 years or so,” Sargent said. “So voicemail sort of evolved into unified messaging and then unified communications.”
And now unified communications is a big deal. Analyst firm IDC predicts the market will grow from $400 million last year to a whopping $5.5 billion in 2005. However, IDC said, the going won’t be easy.
Sargent agrees.
“It’s a very fluid market right now-a lot of players coming in, a lot of attention on the space-so we’ve got to be on our toes,” she said.
But Sargent said Glenayre’s long experience in the infrastructure business, working with carriers and developing relationships, will help the company move fully into its new market.
“I think that because we have the expertise and the longevity in the industry, that’s going to be a strength for us,” she said. “Our service, our ability to work with the carriers-(a competence) that has been proven over the years-I think will give us the edge over companies coming from a different perspective.
“I think if you look at the unified communications marketplace, you’ve got players coming from all over the place. You’ve got people who are traditional CPE (customer provided equipment) vendors, marketing enterprises, you have software companies-there’s all types of solutions. But to really get in the carrier marketplace, it’s going to require the ability to understand what the carrier needs and work with them to implement that, and we bring that to the table.”
Glenayre’s unified communications business includes two technologies: the @ctiveMessaging Large Solution platform and the @ctiveVision Unified Messaging platform. The @ctiveMessaging platform supports large-scale platforms, Web-based services and voice-activated interfaces and portals. It is designed to provide central office-grade network reliability, and allows carriers to support up to 5 million subscribers and 6,000 ports. The @ctiveVision platform allows subscribers to manage voice mail, e-mail, fax and alphanumeric messages from multiple devices through a single mailbox.
“As far as the unified communications and the @ctiveVision platform, we’re getting ready to go to full deployment on that,” Sargent said. “It’s in final testing right now. And as we go out and talk to people about it, there’s a lot of enthusiasm there. The response we get is, `When can we get it?’ “
Glenayre plans to meet its contractual obligations and completely exit the paging infrastructure business by the middle of next year. Sargent said the company hopes to make a “graceful exit.” And as it moves into its new business, Glenayre hopes to make a graceful entrance and, eventually, become as integral to unified communications as it was to paging.
