Convergys reports lower Q4 revenues, shakes up management

Cincinnati-based global billing and customer care provider Convergys’ fourth-quarter 2002 earnings came in at the low end of expectations this week on the heels of an announcement to reshuffle its top management.

Earnings fell 4% to $564.8 million compared with the same quarter last year. Operating income also decreased from $105.2 million to $78.2 million. Revenue for the year ending December 31st was $2.3 billion.

Convergys also repurchased approximately 1.3 million shares of stock during the quarter, bringing to 15 million the total number of repurchased shares.

Jim Orr, chairman, president and CEO of Convergys, said the business environment continues to be challenging, particularly for the company’s Information Management Group. He pointed to a slowdown in wireless subscriber growth, delays in 3G deployments and an increase in pricing pressure as some of the factors affecting earnings.

“Earnings are in line with the low end of our third-quarter conference call guidance and reflect the tough economic environment in which we are operating,” Orr said.

However, Convergys did pick up significant new business in the quarter. “Despite the difficult environment… where carriers are extremely focused on limiting their expenses and the market is intensely competitive in the pursuit of new business, Convergys announced seven new contracts leveraging our next-generation framework,” Orr said.

Dobson Communications signed a five-year outsourcing contract for billing and customer care using Convergys’ Atlys product. The company also won outsourced billing contracts from Vista III Media LLC for analog/digital television and high-speed data, and from Time Warner Cable’s Eastern Carolina division. Convergys now serves 20 of TWC’s 39 divisions.

Convergys’ other new deals include selling its speech recognition solution to VoterLink Data Systems and international contracts with Makedonski Telekomunikacii, a Deutsche Telekom subsidiary, BT Retail, Sri Lanka Telecom and Qatar Telecom.

In an effort to focus on faster growth, Convergys announced management changes on Tuesday. Two executive vice president positions were created, which report directly to CEO Jim Orr. Current CFO Steve Rolls will take the role of executive vice president, global customer management and employee care as soon as the company finds a new CFO. Dave Doherty, currently chief development officer was named as executive vice president, global information management.

Bob Marino, currently the president of Convergys’ IMG, will leave the company February 14th. Larry Schwartz, currently IMG’s executive vice president, will assume the role vacated by Marino and report to Doherty.

“This will align us better with global opportunities in each of our respective markets,” Orr said. “And it will help drive the execution of our strategy better, especially on a global basis and in the current economy.”