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Mitel hints at channel strategy shakeup as IPO looms

Alex Scroxton
Canadian comms vendor Mitel Networks has given the industry a brief snapshot of its future strategy, hinting that it may look towards a new class of reseller and revealing troubling facts about its financial health as it heads towards an imminent $230m (£146.2m) IPO.

On 4 February Mitel filed its Form F-1/A with the SEC in Washington and said its continuing success would be "highly dependent upon establishing and maintaining successful relationships with a variety of channel partners".

Expanding this partner network is on the cards for the near future, added Mitel.

"The majority of our channel partners sell our solutions to the SME market. In the future, we hope to further penetrate the large enterprise market. However, our existing channel partners may not be effective in selling to large enterprises," it said in the filing.

Mitel hasplans to further invest in its distribution channel to capitalise ontrends towards software-based communications, and also has its eye on"channel disruption resulting from industry consolidation".

Itreferred explicitly to Hewlett-Packard's acquisition of 3Com, Avaya'sacquisition of Nortel and Cisco's acquisition of Tandberg as areaswhere it hoped to make up some ground.

Behind the scenes, Mitelhas also been watching "companies that currently compete in othersectors of the information technology, communications or softwareindustries, such as Microsoft and Google."

Towards the end of 2009 Mitel became the subject of allegations that it was planning to reverse its channel strategy and go direct, which its EMEA management branded as "preposterous".

Howeverthere may be concern over the company's continuing inability to pull ina profit. After taking a beating during the initial phases of therecession it lost close to $200m during its fiscal 2009, which closedon 30 April last year, as previously revealed by MicroScope.

But things did not improve a great deal in the first half of fiscal 2010, as total revenues fell 19.3% year-on-year to $321.8m.

Mitelalso booked a net loss of $18m during the six-month period, down from anet profit of $73m in the first half of the previous year.

Apartfrom its financial 2008, when it made a net profit after buyingInter-Tel, Mitel added that it had booked net losses in 2007, 2006 and2005 and each other year since its incorporation in 2001.

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