Convergys billing unit spinoff 'unlikely'

On its earnings call today, Convergys said the economic downturn and challenges in the capital markets make it “unlikely” it will be able in the near term to sell or spin off its Information Management unit, which supplies billing software and services to the communications industry.

Convergys today is focused strongly on so-called “relationship-management” opportunities, selling customer care, call center and, in a relatively new thrust, human resource management solutions to large customers, including but not limited to telecom operators. Its billing unit, which recently announced a major North American win with Leap Wireless, competes with vendors like Amdocs, Oracle, Comverse and other billing providers.

Convergys announced plans to pursue a spinoff of its Information Management business in September, with the idea of establishing it as a separate company. It retained Centerview Partners as its financial advisor to assist in this process and said it would make a decision during the fourth quarter of 2008.

“We will continue our evaluation of this option and will provide updates as the year progresses,” said David Dougherty, president and chief executive officer of Convergys, in a statement. On the company’s earnings call, Dougherty said Convergys would also be “open for offers” from companies looking to acquire the billing unit.

Overall, Convergys reported fourth-quarter revenue of $703.7 million, up from $713.7 million versus the previous year, with a net loss of $29.3 million. The picture was more negative in its Information Management billing division, with fourth-quarter revenue at $113.6 million compared with $176.1 million in the same period last year. Convergys attributed the revenue decline in billing to client migrations in North America, changes in the timing of acceptance of an international project, and project completions. Telecom operators are “pulling back on budget” for large-scale projects like billing updates, Dougherty said.