Telespectrum Vows Resurgence From Brink

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Telespectrum Worldwide, the struggling former teleservices giant that faltered under a heavy debt load, is vowing a comeback from what some analysts thought was an irreversible descent.

According to one industry analyst, Telespectrum was the victim of over ambitious growth and a failure to invest in call center technologies, such as voice-over-Internet protocol and text chat, that clients demand these days.

However, the company said it is ready to return with a trimmer operation, new technology and a new brand.

"There's been a lot of rumors out there about the long-term viability of Telespectrum," said Jeff Bauernschmidt, the company's vice president of sales. "Now we can put those rumors to rest."

In late April, Telespectrum converted $161 million worth of debt into stock, giving its creditors a major stake in the company. The deal let Telespectrum reduce its debt to $25 million.

Telespectrum, King of Prussia, PA, once operated 31 call centers. It now owns 10 -- in Baltimore; Buffalo, NY; Phoenix; Pittsburgh and three each in West Virginia and Canada -- and has contracts to manage three others that are owned by its clients.

The company kept only its best-performing centers, Bauernschmidt said. The lean new look should let Telespectrum invest its capital in technology and operational growth once again.

The financial services industry, particularly insurance, remains important in Telespectrum's market mix, representing about 35 percent of revenue.

In addition, the company increased inbound teleservices to 50 percent of its business, from 40 percent previously.

"Inbound customer care is good work," Bauernschmidt said. "It's more static and more consistent."

Some skeptics remain. Alan Creech, a teleservices industry analyst with Emerging Growth Equities Ltd., also of King of Prussia, said he thinks that the creditors who made the debt-for-stock deal are likely just looking to get their money back, not to become long-term shareholders.

Though he declined to predict how much longer Telespectrum could hold on, Creech said that without an injection of fresh capital it cannot be expected to continue as a going concern.

"They're pretty much done in my opinion," he said.

Telespectrum was among the many big-name teleservices providers that bought up independent call centers in the late 1990s to grow their business. The acquisitions weren't meant to increase call center staff, Creech said; rather, they were aimed at picking up the business relationships and clients that the independents had.

But Telespectrum and others who followed this strategy soon discovered that simply buying a call center didn't mean they got to keep the center's contracts. Bought-out independent owners took their multimillion-dollar checks -- and took their clients with them.

Telespectrum was left at the end of its buying binge with little capital to invest in technology, Creech said. The lack of technology put Telespectrum at a disadvantage in competing for contracts and attracted smaller firms who picked off some of its clients.

Bauernschmidt acknowledged that Telespectrum's acquisitions led it into debt trouble. But he said that technology had never been a problem.

"I don't think we lost any programs because of a lack of technology," he said. "We had about what we needed to keep a level playing field."

Telespectrum has the capability for Web-based reporting and call blending, Bauernschmidt said. It also is capable of online interactions, including Web chat, e-mail and co-browsing.

What the company needs is to get its name back on the market to quell naysayers, he said. Telespectrum recently hired five new sales people and developed a branding campaign with the tagline, "Make the most of the moment." A brochure featuring the tagline, designed by DePersico Creative Group, Havertown, PA, received recognition this month at the Philly Gold Awards, a regional ad competition.


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