Quintus Disappears into Avaya Fold
 
Robert Conlin 
April 12, 2001 
 
The Quintus ride has come to an end -- in its last quarter, Quintus
reported revenues of $9.5 million and a net loss of $295 million.  After a
jarring, page-turning sequence of events over the last few months, the
final chapter of a 17-year-old company that built a name for itself as a
high-end maker of CRM call center software came couched in the dry press
release lexicon of today's business world: "Avaya Completes Asset Purchase
Agreement With Quintus Corporation."  The headline signaled the virtual
end for Quintus Corporation, which will be left with only a corporate
shell to deal with a slew of class-action lawsuits and investigations into
alleged fraudulent revenue reporting by its former chief executive.
 
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For Avaya (NYSE: AV), the price was right for a company with nearly 1,000
customers and a recognized position high up on the ladder of the call
center software industry: US$30 million and the assumption of up to $30
million in debt. The company said it will immediately begin to offer an
expanded CRM product line to customers, utilizing Quintus' portfolio of
software applications.  Winning Bid

Avaya and Quintus announced the deal in February -- the same day that
Quintus announced it was filing for Chapter 11 bankruptcy protection. The
deal was confirmed when Avaya submitted the final bid to a court-appointed
bankruptcy trustee late last month.

Avaya said it will focus its CRM offerings on interaction management,
commitment management and business intelligence. The world's top seller of
automatic call distribution and interactive voice response systems and the
second-ranked worldwide vendor in predictive dialers for customer call
centers said its CRM portfolio has been "greatly enhanced" by the Quintus
acquisition.

A majority of Quintus' 350 employees now are employed by Avaya, the
company said. Quintus cut 25 percent of its workforce last November and
moved its offices from Fremont, California, to Dublin, California, in a
futile bid to save $8 million a year and stave off the eventual course of
action.

A Swift Demise 

Before last November, Quintus was sailing along in the court of industry
opinion, racking up the likes of United Airlines, Ashford.com, John Deere
and others as customers and forging alliance deals with Oracle, Siebel
Systems, IBM and many more.

All that changed, however, when the company announced that former CEO Alan
Anderson had left the company following the discovery of at least $13.5
million in fraudulently reported revenues. The figure would end up being
$17.4 million, and the company's net loss climbed by the same amount.

The final numbers revealed a company banked steep into a death dive. In
its last quarter, Quintus reported revenues of $9.5 million and a net loss
of $295 million, $250 million of which was attributed to its disastrous
acquisition of e-mail management company Mustang.com.

In the end, Quintus will surely be no more than a footnote in the business
history of the United States, as a tarnished example of a time when some
companies and the people who ran them answered to a call more persuasive
than the truth. But the Quintus saga may hold a compelling lesson for the
present if corporations in dire straits heed the warning signs.