Predictable Profitability

BPO Company discusses 2009, 2010

Convergys Corporation outlined part of its 2010 agenda and reviewed 2009 results on a conference call yesterday. Earlier this week, we noted that Convergys plans to reduce its workforce across its operations. The business process outsourcing company said the job cuts were “not a major staff reduction.”

“We are taking difficult but necessary actions to further streamline costs and pursue operating improvements,” said CEO David Dougherty. “This should result in Customer Management margin expansion, double-digit margins in Information Management and HR Management profitability this year.” Dougherty declared "predictable profitability" to be its primary mission in 2010. The company told investors it plans to boost spending on research and development, and increase its salesforce.


For example, Convergys held a job fair on Jan. 13 to hire more than 100 full-time workers for its Lake Mary, Fla., call center.

Convergys provides customer service and sales support to several companies under contracts that are serviced by the Lake Mary call center.

New hires will be provided with training and benefits, including tuition reimbursement, a 401(k) plan option, and unpaid time off.


On the call, the company also announced that for FY 2010, it expects revenue of around $2.6 billion, EBITDA to be in the range of $330-$360 million and earnings per diluted share (EPS) to be in the range of $1.05-$1.20.

Convergys reversed a year-ago loss for its fourth quarter, partly due to restructuring two contracts and initiating a plan to streamline its operations. The company posted fourth-quarter net income of $41.6 million, or 33 cents per share, compared to a net loss of $29.3 million, or 24 cents per share, in the year-ago quarter. Revenues fell to $684.4 million from $703.7 million. Analyst expectations were an EPS of 31 cents, with top-line revenues of $663.7 million.

Convergys said it restructured the second of two global human resources contracts during the quarter, to eliminate future implementation obligations and liability for services that aren’t yet operational.

In 2009, Convergys reported a loss of $77.3 million, or 63 cents per share, compared to a net loss of $92.9 million, or 75 cents per share, in 2008. Revenues increased slightly to $2.83 billion from $2.79 billion.