CINCINNATI-Convergys Corp., which provides outsourced customer services, human resources and billing services for some telecom companies, has slashed its fourth-quarter earnings projections by more than half.
The company said it expects fourth-quarter earnings to be 14 cents per share instead of the 30 cents per-share guidance it had touted in October. It said the change in revenue is due in part to an income tax bill of $11 million (8 cents per share) from repatriating $187 million in cash; and to an additional $5 million in additional severance expenses in the fourth quarter (2 cents per share.) Another loss of 6 cents per share was blamed on Convergys’ collaboration with Cingular Wireless L.L.C. in the Cincinnati SMSA L.P., which provides wireless service in parts of Ohio and Kentucky. Convergys said it was notified that instead of the pre-tax earnings of $5 million to $7 million it expected, accounting adjustments meant that a loss estimated at about $13 million would be reported in the fourth quarter.
Convergys said it expects in 2006, “additional benefits from severance will partially offset the less-than-anticipated contribution from the cellular partnership.”
Convergys Chairman and Chief Executive Officer Jim Orr said as the company enters 2006, it has built a strong backlog and is encouraged by recent market wins and its ability to continue to drive costs out of the business. “Our strong operating performance is continuing in the fourth quarter and we remain comfortable with our 2006 guidance” of at least $1.07 per share, said Orr.
