Mitel’s transition to the cloud will drive its growth, says McBee

On its fortieth anniversary, Mitel’s (Mitel Stock Quote, Chart, News: TSX:MNW) legacy business is still weighing on its results, but its efforts in virtualization are quickly supplanting that negativity, says the company’s boss.

CEO Rich McBee presented at the M Partners Tech13 conference in Toronto this morning.

McBee says Mitel has made a big bet on virtualization and is currently in the process of working through legacy drivers that have hampered growth. But the Mitel CEO says that the places the company is headed have significantly better outlooks. “Where we are focused we are seeing tremendous growth,” he says.

On August 29th, Mitel reported its Q1, 2014 results. The company lost $3.8-million on revenue of $141.6-million, bucking the company’s recent trend towards profitability.

The speed of Mitel’s transition towards becoming a pure cloud play is being mirrored by its customers.

“We have a lot of customers who want to go to the cloud but aren’t quite ready,” says McBee. He notes that the company is seeing success in its MiVoice, MiContact Centre and MiCollab products, which give clients the option of transitioning to virtualization gradually.

McBee notes that the cloud in 2013 is a $5.3-billion market with a 23-30% compound annual growth rate.

Last summer Mitel returned home, listing on the TSX for the second time in its history.

The company’s roots go all the way back to 1973, when Corel founder Michael Cowpland and Canadian telecom legend Terry Matthews, who had met at Nortel forerunner Bell Northern Labs, intended to import and sell cordless electric lawnmowers. When their first shipment of lawnmowers was lost at sea, the pair began to produce a telephony tone receiver product that was based on Cowpland’s Ph.D. thesis.

By 1981, Mitel had reached the $100 million dollar annual revenue mark. Then, in 1985 British Telecom acquired a controlling interest in the company. Matthews then went on to form Newbridge Networks, which was sold for more than $7 billion to Alcatel in 2000. This made Terry Matthews, who emigrated to Canada in the 1960′s, the first billionaire in the history of Wales. Cowpland went on to found Corel which, at one point, was Canada’s largest tech company.

In April of 2010, With Matthews as its chairman, Mitel went public for the second time. Mitel IPO’d on the Nasdaq at $14 a share, but the IPO was not a success. In January of 2011, the company brought in industry veteran Rich McBee from Danaher to right the ship. McBee presides over a new Mitel with a growing sweet spot in moving small and medium sized businesses to the cloud.

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