Sitel Reports 2Q Charge and Lower Earnings

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Citing less campaign activity in its European operations and excess capacity, Sitel reported low earnings results, including a restructuring charge of $6.6 million for its second quarter ended June 30.

Excluding the restructuring charge and the related tax effect, the Omaha-based company reported net income for the second quarter of $84,000, compared to $6.6 million, or 10 cents per share diluted, for the same period last year. Revenues for the second quarter ended June 30 was $147.3 million, up 17.6 percent from revenues of $125.3 million in last year's second quarter.

"On an operating income basis the company lost money," said Laurie Kolbeins, managing director, Texada Capital Corp., Wayne, PA, an investment banking firm. The company is in the process of rationalizing operations in Europe and letting people go where they are not needed, Kolbeins said.

Revenues in Europe declined approximately 2 percent over the prior year's second quarter.

"Once this restructuring is completed, our resources will be in line with existing levels of business," said Phil Clough, CEO for the company. New contract signings with Philips and 3Com and improvement in the company's sales pipeline are expected to result in increasing revenues and improved capacity utilization in the second half of the year in Europe. Profits are forecast to reach targeted levels by the end of the year.

The company expects improved results overall for the third and fourth quarters.

The only poor performer is Europe, said the company, where it ranks as the largest teleservices firm. Business in its other regions -- North America, Asia Pacific and Latin America -- continue to perform in line with management's expectations.

North America was the company's only profitable region during the second quarter.

North American operations posted a second quarter revenue growth of approximately 28 percent over the comparable period of 1997 mostly in the financial services and insurance sectors.

Sitel's Asia Pacific and Latin American operations showed progress but are not yet showing profit. Improved results are expected by year's end.

Sitel operates more than 12,900 workstations in more than 70 call centers in 18 countries.

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