DINNER SPEECH TO INVESTORS AND FINANCIAL ANALYSTS [Nov. 11, 2008]
[Time: 4 minutes, 20 seconds.]
Ladies and gentlemen. Friends. Colleagues...enemies. [Smile. Wait for laughter.] Thank you all for coming. I hear the lobster is excellent, so I’ll keep this short. [Wait for silence.]
My name is Mark Rasmussen, and I am the Investor Relations Officer for GlobalSource. I’m here tonight to talk a little bit about GS’ current financial situation, our recent stock volatility, and why we are a superb value for the medium- and long-term institutional investor.
Before I go into the past, let’s talk a little about the present. [Display Financial Chart #1 on screen behind lectern.] Our net revenue last quarter was $75 million, an increase of 23% over the same period in our last best year to date.
Last year, we had $260 million in sales, up from $16.1 million in 2003, our first year in the black.
We have NO, I repeat NO, long-term debt.
We have a five-star rating from Morningstar and Vanguard.
We serve world-class clients, from AT&T to Vonage.
Finally, we are a rising star in one of the fastest-growing B2B service sectors in the world: the outsourced call-center industry. Analysts predict 60% growth in demand for call services over the next five years – and just as that demand is growing, companies like Infosys and Wipro are leaving the sector open to second-gen innovators like GlobalSource.
That’s the present. As for the past....
Most of you know that GlobalSource had negative revenues in 2004 and 2005. It caused some concern at the time, and it increased our stock’s five-year volatility. I know this has been a special interest for those of you who are looking for conservative, low-risk equity plays.
Both dips represented a failure of our corporate strategy. But it’s a strategy that we’ve now changed.
Before 2004, GlobalSource pursued large-cap multinationals almost exclusively. We were successful, too, acquiring clients like AIG, Sun, and General Motors. However, the call demand from these large clients was so great that we could only service a limited number at any one time. Instead of a widely diversified portfolio of smaller clients, we had a small, volatile basket of seven or eight giants. And when one or two of those giants altered their contracts, it caused our revenues to dip.
Of course, we found new clients within months. But we knew that this was only a temporary solution, because client instability is common in our industry. So we pursued a long-term restructuring and carried it out in less than two years. Now, in 2008, our call capacity has increased by a factor of ten; our contracts offer better terms, but are written for longer periods, which reduces client instability; and our portfolio is fully diversified, according to a formula we set up with the help of the computer modeling department of Harvard Business School. Our revenue has grown by leaps and bounds since 2005, and we project much more growth in the future. [Display Chart #2.]
[Look at chart.] Ahh...the future. Looks good, doesn’t it? [Pause for reaction.] In the next five years, we expect two factors to shape the market.
The first is rising demand. As I mentioned before, 60% over the five-year term; and then another 30% out to ten years.
The second is rising competition. CCP operations have low entry barriers, and they’ll get even lower as the technology becomes more easily packaged. We expect competition not just from other CCPs, but even from our clients’ own in-house operations. How are we responding?
First, with the quality of our people. Our rigorous training creates the best call operators in the industry. Our operators provide customer service that is unmatched. We are the only CCP to initiate a two-month training program for all operators, and to graduate only 60% of our applicants. We have even leased our training program back to several companies that use it for their own in-house call centers.
Second, we have designed a unique pricing structure that charges our clients, not for the number of calls handled, but for the value-added of our services. We charge a percentage of the money our clients save by using us; this makes their returns easily quantifiable. This feature alone netted us five new clients in the first quarter of 2008.
And finally, we are expanding into other back-office services, from accounting to benefits management to IT. Within the next decade, GlobalSource will be a full-service BPO on a par with Wipro and Infosys.
In the last nine years, we have proven our flexibility, our energy, and our resourcefulness. When you invest in GS, you don’t invest in factories or mines or patents. You invest in us. I think we’ve shown we’re worth it.
And now, I'll be happy to answer any questions-
[Time: 4 minutes, 20 seconds.]
Ladies and gentlemen. Friends. Colleagues...enemies. [Smile. Wait for laughter.] Thank you all for coming. I hear the lobster is excellent, so I’ll keep this short. [Wait for silence.]
My name is Mark Rasmussen, and I am the Investor Relations Officer for GlobalSource. I’m here tonight to talk a little bit about GS’ current financial situation, our recent stock volatility, and why we are a superb value for the medium- and long-term institutional investor.
Before I go into the past, let’s talk a little about the present. [Display Financial Chart #1 on screen behind lectern.] Our net revenue last quarter was $75 million, an increase of 23% over the same period in our last best year to date.
Last year, we had $260 million in sales, up from $16.1 million in 2003, our first year in the black.
We have NO, I repeat NO, long-term debt.
We have a five-star rating from Morningstar and Vanguard.
We serve world-class clients, from AT&T to Vonage.
Finally, we are a rising star in one of the fastest-growing B2B service sectors in the world: the outsourced call-center industry. Analysts predict 60% growth in demand for call services over the next five years – and just as that demand is growing, companies like Infosys and Wipro are leaving the sector open to second-gen innovators like GlobalSource.
That’s the present. As for the past....
Most of you know that GlobalSource had negative revenues in 2004 and 2005. It caused some concern at the time, and it increased our stock’s five-year volatility. I know this has been a special interest for those of you who are looking for conservative, low-risk equity plays.
Both dips represented a failure of our corporate strategy. But it’s a strategy that we’ve now changed.
Before 2004, GlobalSource pursued large-cap multinationals almost exclusively. We were successful, too, acquiring clients like AIG, Sun, and General Motors. However, the call demand from these large clients was so great that we could only service a limited number at any one time. Instead of a widely diversified portfolio of smaller clients, we had a small, volatile basket of seven or eight giants. And when one or two of those giants altered their contracts, it caused our revenues to dip.
Of course, we found new clients within months. But we knew that this was only a temporary solution, because client instability is common in our industry. So we pursued a long-term restructuring and carried it out in less than two years. Now, in 2008, our call capacity has increased by a factor of ten; our contracts offer better terms, but are written for longer periods, which reduces client instability; and our portfolio is fully diversified, according to a formula we set up with the help of the computer modeling department of Harvard Business School. Our revenue has grown by leaps and bounds since 2005, and we project much more growth in the future. [Display Chart #2.]
[Look at chart.] Ahh...the future. Looks good, doesn’t it? [Pause for reaction.] In the next five years, we expect two factors to shape the market.
The first is rising demand. As I mentioned before, 60% over the five-year term; and then another 30% out to ten years.
The second is rising competition. CCP operations have low entry barriers, and they’ll get even lower as the technology becomes more easily packaged. We expect competition not just from other CCPs, but even from our clients’ own in-house operations. How are we responding?
First, with the quality of our people. Our rigorous training creates the best call operators in the industry. Our operators provide customer service that is unmatched. We are the only CCP to initiate a two-month training program for all operators, and to graduate only 60% of our applicants. We have even leased our training program back to several companies that use it for their own in-house call centers.
Second, we have designed a unique pricing structure that charges our clients, not for the number of calls handled, but for the value-added of our services. We charge a percentage of the money our clients save by using us; this makes their returns easily quantifiable. This feature alone netted us five new clients in the first quarter of 2008.
And finally, we are expanding into other back-office services, from accounting to benefits management to IT. Within the next decade, GlobalSource will be a full-service BPO on a par with Wipro and Infosys.
In the last nine years, we have proven our flexibility, our energy, and our resourcefulness. When you invest in GS, you don’t invest in factories or mines or patents. You invest in us. I think we’ve shown we’re worth it.
And now, I'll be happy to answer any questions-