Aspect Postpones Public Stock Offering

Aspect Communications, a publicly traded provider of enterprise customer-service solutions, has announced it is postponing a proposed public offering of 12 million additional shares of common stock. The sale was to include the sale of 9.3 million shares by specific shareholders. According to the company, the sale was not in the best interests of Aspect or its shareholders due to current market conditions.

The company first announced the offering February 16th. Credit Suisse First Boston, UBS Investment Bank, Banc of America Securities LLC, Thomas Weisel Partners LLC and Kaufman Bros., L.P. were to be the underwriters.

Aspect stock hit a low toward the end of last year but has been trending up since. It stayed on that trend following the announcement.

First Quarter Positive

On April 15th, the San Jose, California-based company reported its first-quarter results, showing net income growth from US$3.3 million to $15.6 million and earnings-per-share growth from 2 cents per share to 17 cents per share. Aspect revenues in the first quarter of 2004 grew to $91.5 million, compared with $84.4 million in the first quarter of 2003, but declined from $97.4 million in the fourth quarter of 2003.

First-quarter gross margins were 61 percent, down slightly from 62 percent in the fourth quarter of 2003 but up from the 53 percent reported in the first quarter of last year.

Seventy-five percent of the company's stock is owned by institutional investors.

An update to the company's Aspect Customer Self-Service 7.0 launched in March with support for VoiceXML 2.0 and enhanced speech technology, featuring new support for the latest versions of third-party server software and hardware.

Financial Dealings

Aspect's proposed public offering was not the only plan to have its genesis in February. During that month, Aspect entered into a $100 million revolving credit facility led and administered by Comerica Bank with The CIT Group/Business Credit Inc. named as a collateral agent. Others participating in the agreement were Fleet National Bank, GE Commercial Finance, Key Bank and US Bank. This new credit facility replaced Aspect's prior $50 million credit facility with Comerica Bank and CIT. Simultaneously, Aspect used the new facility to refinance its existing $39 million in long-term borrowings.

Also in February, Aspect disclosed that Gary Barnett had been named president and CEO. A founding engineer at Octel Communications, Barnett helped develop Octel's first voice-messaging system and was a pioneer in the field of unified messaging. After leaving Octel, he become a founding engineer at Aspect but left in 1987 to lead Prospect Software, a company that pioneered computer-telephony integration in the early 1990s. Barnett returned to Aspect in 1996 when Aspect acquired Prospect.

Optimistic Trends

Aspect's products integrate the contact center with the enterprise through applications designed to improve customer communications, customer and contact center information, and workforce productivity. Its customer base includes corporations in a range of industries, including transportation, financial services, insurance, telecommunications, retail and outsourcing, and large government agencies.

During the first quarter, Aspect said, it derived significant revenue from customers across a variety of industry segments and gained several new customers, including AMB Generali Informatik Services GmbH, Blue Cross and Blue Shield of Kansas, Cablevision, Independence Community Bank, Medion AG, MyFamily.com, Wellpoint and Xerox.

The company said it is planning for a revenue increase of 3 to 5 percent during the second quarter and expects its second-quarter gross margins to remain consistent with first-quarter levels. However, it warned that gross margin percentage depends on many factors, including the mix and volume of revenues. The company said it expects operating expenses in the second quarter to be up 2 to 3 percent over the first quarter.

According to Aspect's first-quarter statement, the company's preferred stock conversion and public offering was also to impact the second quarter by approximately $23 million due to a one-time shareholder charge. Postponing the public stock offering delays this expense.