Wednesday, October 20, 2004

Convergys plans to cut jobs

Information management group targeted

By Mike Boyer and James McNair
Enquirer staff writers

Convergys Corp. plans to cut an undisclosed number of management jobs in its information management group, according to a memo sent to employees this week.

A company spokeswoman said Tuesday the Cincinnati-based billing and customer-care provider would have no comment before the release of its third-quarter earnings this morning.

In a memo obtained by the Enquirer, David F. Dougherty, executive vice president of the information management group, announced the cutback plan to employees.

"Put simply, we have more management personnel than we need to effectively lead IMG going forward," the memo said. The cuts would include management worldwide, according to the memo.

The group employs about 3,350, according to the company's latest annual report, mainly at data processing centers in downtown Cincinnati and Orlando, Fla.

It was unclear how many managers might be affected. However, the Convergys memo outlined a two-phase staff reduction that would start with voluntary buyouts and could include involuntary severance if unspecified management staff reduction goals were not met.

In North America, the memo said, eligible managers will be offered a voluntary severance plan through Nov. 8. According to the memo, the involuntary cutbacks would be completed by mid-January.

Overseas, the memo said, job cuts also would begin immediately.

Convergys employs about 2,000 in the Cincinnati area, including its Norwood call center. In 2003, the company won a controversial $200 million incentive package from the city of Cincinnati and the state of Ohio to keep its headquarters downtown in the Atrium I building.

The information management group division, which provides billing and software to large telecommunications companies, represented about a third of Convergys' revenues last year of $2.28 billion. But in the face of telecommunications consolidation and spending cuts, the group's operating earnings have declined.

And the billing business could face further pressure because of the impending acquisition of AT&T Wireless by Cingular Wireless. Investors expect Cingular to use a rival billing provider when the merger is completed.

AT&T Wireless represented about 21 percent of the information management group's revenues of $789 million last year, according to the company's annual report.

Convergys shares, down 24 percent this year, closed Tuesday at $13.40, down 31 cents. The consensus estimate among analysts is the company will report earnings of 22 cents a share for the three months ended Sept. 30.

In the third quarter last year, Convergys reported earnings of $45.5 million, or 31 cents a share.

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