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The curious success of APAC Customer Services
Topics: macro, news and views, trade ideasWith customers in the “healthcare, business services, publishing, communications, travel and entertainment and financial services industries,” APAC Customer Services (Nasdaq:APAC) should be a disaster. But its not.
APAC, a business service outsourcing company, reported fourth quarter earnings of $.10/share. That’s up from a loss in the prior year quarter. Revenues grew as well, up about 6% to $65.3 million. APAC carries $6.1 million in debt. To me, the absolute number is not as important as the trend. The $6.1 million is down ” from $13.8 million at the end of the 2008 third quarter, and from $26.3 million at the end of 2007, due primarily to improved operating income.”
On the fourth quarter conference call (transcript courtesy of Seeking Alpha), CEO Mike Marrow explained:
As everyone can imagine, we are very excited about our continued progress.
Early last year, we announced our goal of putting APAC on the path to long term, consistent, profitable growth. I think our progression of improving results over last year demonstrates that we are on the right path. While many companies have been struggling just to stay even, APAC’s 4th quarter revenue rose 6% year-over-year, and we went from a sizable net loss in Q4 of 2007 to a net income of $5.1 million or $.10 per diluted share in Q4 of 2008.
Based on the current economic environment and barring any significant deterioration in our clients’ businesses, we expect to see high single to low double-digit revenue growth in 2009. We also expect to generate full-year pre-tax profit margins for 2009, in the range of what we produce in the 4th quarter of 2008.
Technically, APAC shares bottomed out in the Spring of 2008, and didn’t retest those lows even in the turbulence of the last six months. Further moves upward face plenty of resistance — at around $2.00, $2.45, and $3.00, but unlike most stocks APAC also has solid intermediate support (around $1).
Get trend analysis for APAC from Ino.com
DISCLOSURE: No position (but may buy this week).
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