MSGI Cites Labor Dispute in Year-End Loss

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Diversified direct marketing concern Marketing Services Group Inc., New York, might divest its telemarketing operations, after the company cited the division as contributing to its fourth consecutive year of losses. MSGI, which this week reported a loss of $20.18 million for the fiscal year that ended June 30, said that an attempt to unionize the company's telemarketing facility contributed to the loss.

Jeremy Barbera, the chairman/CEO of MSGI, said he was "optimistic" about the company's call center operations because of new management, but added that the company will "continue to thoroughly assess the viability of this division in the near term."

He said that the company's direct marketing operations, with the exception of its telemarketing division, experienced internal growth "in excess of 10 percent."

Despite the losses from telemarketing, the company strung together enough acquisitions, including the purchase of CMG Direct, New York, to boost its revenues by about 60 percent for the year, to $82.24 million, up from $51.17 million in the preceding year.

The company's year-end loss included one-time charges of about $12.54 million related to a severance charge and a dividend payment from a 1997 stock agreement. Without the one-time charges, the loss for the year totaled $6.52 million, vs. a loss of $780,478 before one-time charges in the preceding year.

The company also attributed the loss to poor performance by its fulfillment operations and to increased amortization of goodwill associated with recent acquisitions.

Barbera described the company's Internet unit as having had a "very active year." It included minority investments in Screenzone Media Networks, South Orange, NJ, and, Seattle, the acquisition of CMG Direct and the formation of a new Internet division, WiredEmpire, based on offerings from CMG Direct's PermissionPlus technology.

However, even as the company bolstered its arsenal with an array of Internet marketing vehicles, its stock price has plummeted.

After its stock soared to more than $51.25 a share in April, it began a steady descent, ending the fiscal year on June 30 at just over $26. Last week, the stock was trading at about $12 per share.

Three new stocks have been added to the Portfolio this month: Market America Inc., Greensboro, NC, Quintel Communications Inc., Pearl River, NY, and Reliant Interactive Media, Clearwater, FL. Also, MySoftware, Palo Alto, CA, has changed its name to ClickAction Inc. and its stock symbol to CLAC. Data for Amazon and Gateway reflect two-for-one stock splits, effective Sept. 2 and Sept. 8, respectively.

Portfolio Value: If $1,000 had been invested in each of these companies at the beginning of the year - for newly public companies when the stock first closed - the value would be $110,342, or an increase of 10.34 percent.
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