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ShoreTel's Plan to Weather the Storm

Company CEO John Combs says the edge comes from the relatively small company's $107 million cash reserve and "No debt. Ze-ro."Like everyone else, ShoreTel is feeling the effects. In the quarter that ended last month, the company reported a net loss ($2.2 million on $35.9 million revenue), but that revenue figure was up 12% over the year-ago quarter. The company's biggest problem, says Kevin Gavin, is just getting a foot in the door at enterprises that think Cisco or Avaya first. "Our biggest competition is not getting in on a deal," he said, adding that he tells prospects he's perfectly happy to be used: "Invite us to the table...even if you're using us to beat up Cisco on price."

I met with John Combs and Kevin Gavin on the VoiceCon show floor, where the ShoreTel booth still had people in their theater space watching demos, half an hour before the floor closed for good yesterday. Combs said the plan for growth features strengthening relationships with major partners including AT&T, Black Box and CDW, a key factor for a company with 100% indirect sales. Though ShoreTel's heritage is in small-medium enterprise, Kevin Gavin said their "sweet spot" is now anywhere from 50 to 5,000 stations.

Combs acknowdges that the environment is getting tougher. Sales cycles have lengthened from about 90-120 days, to more like 120-180 days, he said. To address it, ShoreTel will go forward with a financing program that it, fortuitously, launched in July, even before the financial system collapse.

I also asked Combs and Gavin if they're concerned about Microsoft OCS co-opting the position of the phone system. They insist that prospect is far enough in the future for it not to represent a near-term threat. They'll have to be right about that in order for ShoreTel's current advantages to make a critical difference.