Apac CFO Resigns on Heels of Weak 3Q, But Outlook Strong

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John Abernethy resigned this week from Apac Customer Services, less than two weeks after what analysts called a weak third quarter in spite of a 22 percent increase in earnings over last year's similar quarter. His replacement, Mark Remissong, was previously the CFO of US Robotics before it merged with 3Com Corp. According to analysts,the change is not expected to adversely affect the company,which previously went by the name Apac Teleservices.


"I don't think this has anything to do with the third quarter," said Ken Winston, an analyst with Needham & Co. "What it may have to do with is that he was head of the due diligence team that looked into the ITI merger, but if that is the case than it is unfair. ITI has some skeletons, but they are getting a good person in Remissong to replace him."


The company's third quarter net income of $3.4 million, or seven cents per share is up from the same quarter of last year when the company had a net income of $2 million and an EPS of four cents.


Winston said that this was a weak quarter in spite of the increase.


"The earnings net income went up because of the acquisition of ITI," said Winston. "Last year APAC didn't have ITI, so when you compare apples to apples the revenue came in below our estimates."


Winston said APAC was expected to earn $130 million in revenues, rather than the $119.3 million the company reported for the third quarter.


Part of the loss, 5 percent of its outbound work, was caused when reseller NTC pulled out because of regulatory issues.


The company was pleased with the quarter in spite of the analysts estimates, said John T. Calk, vice president of marketing and business development for APAC.


"We have got to be really pleased that we were able to make our numbers," he said. "We had been telling the analysts all quarter long that we were going to make our numbers."


Company officials said Abernethy resigned citing a desire to pursue other interests.


"Abernethy decided to go off and look at other opportunities and was interested in expanding himself," "Fortunately for us we had been talking with Remissong. We have known him for the past 12 to 18 months ever since his company merged, we have talked to him about coming over and work with us on our team. It was a win win for all parties involved."


Calk added that the change in CFO does not impact the company's vision for its rapid growth cycle. In the first week of November, APAC will be launching the new position of the company and will be training all of the managers on the new products the company is releasing.


"[Abernethy's resignation] will not effect this process at all," Calk said.


The company recently announced a $10.8 million contract with Science Applications International Corporation, effective the current quarter, to establish two customer service call centers in support of a U.S. government initiative. The contract will be funded for 390 seats.
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