Portfolio: Rising Economy, New Deals Boost Sitel

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Record revenue and a major customer acquisition occurred recently at Sitel Corp. as its stock price rose 33 percent.


The provider of outsourced contact center services reported third-quarter revenue of $208.8 million Oct. 29, up from $190.7 million in that quarter last year. And it announced a deal Nov. 24 with subscriber-based satellite radio service XM Satellite Radio Holdings Inc.


The news occurred while its stock moved from $1.73 on Oct. 28 to $2.40 on Nov. 25. It closed at 96 cents Feb. 6, its low price for the year.


But there was more to the success than just the new account.


"The industry has been improving, and we're driven by the economy," said Bill Sims, vice president of investor relations at Sitel, Omaha, NE. "When our clients sell more products and services, they have more customer support requirements. And as that occurs, we all benefit through providing more services for our clients. It's been a combination of new business and more business from existing clients. We list 300 clients, and revenues for a lot of those clients are up."


The company generated $770 million in revenue last year. It has 79 contact centers in 22 nations serving clients and customers in 50 countries. It has 25,000 employees, up from 23,000 a year ago. Its workstation total has grown in the past year from 18,200 to 21,900.


"Our business model is to be decentralized," Sims said, "and that's important because by having business centers around the world -- broken up geographically, except in North America -- it means we can be more client-centric and we can grow the local markets.


"There are new clients we're taking offshore. People are looking at ways to improve costs and still serve their clients well. New and existing clients are looking for that as well as a blended offering. A lot of our growth has come from our international operations."


Third-quarter highlights encompassed three new client programs for a combined 600 workstations in Mumbai, India:


* A hardware and software provider awarded Sitel 300 workstations of customer care and technical support to be operational in the fourth quarter.


* Starting in the first quarter, 200 workstations of customer service support for a travel organization.


* And 100 workstations for a financial institution that began operations in the fourth quarter.


"We were a bit above our previous outlook on revenue," Sims said. "In the second quarter we said the third quarter would be similar to the second when we had $204.6 million. We beat it during a time when you typically have lower revenue in the third quarter since a lot of international operations are operating at a time when people take off for holidays during August. We grew even in what is typically a slow third quarter."


As for the XM Satellite Radio deal, customer support is being provided through 250 workstations split between Augusta, GA, and Toronto.


"They are at 1 million subscribers," he said, "and as they grow and we perform for them, it could grow to 700 workstations across multiple contact centers."


In other news, ADVO had a 3-for-2 stock split.


Portfolio value: If $1,000 had been invested in each of the 100 companies in the DM News Portfolio at the start of 2003, or when the stock first closed for newly public companies, the value would be $148,540, up 48.54 percent.


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