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Sykes looks for positive future

After one of its toughest years, Sykes uses its annual meeting to focus on moves meant to turn it around.

By SCOTT BARANCIK

© St. Petersburg Times, published April 27, 2001


TAMPA -- By building call centers in such far-flung locales as the Philippines and Costa Rica, Sykes Enterprises Inc. has saved millions on labor and real estate costs. The key drawback: high long-distance phone charges.

That's about to change.

Thanks to millions of dollars spent on Cisco Systems switches and other communications technologies, the Tampa customer-support company already is beginning to realize substantial savings on some calls. The cost of routing an "800" call from the United States to Manila, for example, has fallen from about 48 cents a minute to less than 12 cents.

For Sykes, which fielded about 9-million calls in the last quarter alone, it's a promising development.

"In essence, we're a phone company," chief financial officer Mike Kipphut said Thursday after Sykes' annual shareholders meeting in Tampa.

Soon, chief information officer Gerry Rogers said, Sykes will put in operation a computer system that automatically routes callers to the first available agent who speaks their language and has the appropriate knowledge base -- whether the agent works in Bismarck, N.D., or Budapest, Hungary.

But those encouraging developments weren't enough to save chief executive John Sykes from reflecting on 2000, the company's most abysmal year since going public.

Sykes said accounting miscues were the low point of what he dubbed a "year of adjustment." He said he was eager to settle a related class-action suit, expected a settlement within about a year and predicted the dollar amount would fit within the range covered by the company's insurers.

Sykes Enterprises last year earned $45.6-million, compared with net income of $21.9-million a year ago, but much of its 2000 earnings came from the sale of its health-care subsidiary. Sykes' stock price, which hit a high of $51.06 in January 2000, fell as low as $3.44 in December. It closed Thursday at $5.41, up 7 cents.

In answer to a shareholder's question about how the company would restore its credibility on Wall Street, Sykes said a few consecutive quarters of solid numbers would help. "Once you get in the penalty box, it takes a lot longer to get out than it did to get in," he said. Otherwise, he and other company officials mostly emphasized the positive.

For example, the company's efforts to diversify its customer base beyond computer hardware and software manufacturers is paying dividends. While only 1 percent of the company's 1998 revenues came from telecommunications clients, the sector accounted for 28 percent of sales in the quarter ended March 31.

Also, a stock incentive plan approved by shareholders will allow Sykes to award stock options to call-center directors.

The meeting had its lighter moments. Early on, CEO Sykes jokingly chastised Mitch Nelson, senior vice president of the company's consulting arm, for being the only male officer or director of the firm to have a full head of hair.

Later, when a shareholder asked why the St. Petersburg Times continues to be so tough on the company, Sykes laughed along with the rest of the audience.

"I'm not a subscriber," he said. He added that he thinks the media focuses on the negative but said he defends their right to report "what they believe to be right."

- Scott Barancik can be reached at barancik@sptimes.com or (727) 893-8751.

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