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Tampa Bay-Lakeland
Business Observer Thursday, Dec. 1, 2011 9 years ago

Sykes shrinks global operations

The firm will leave South Africa and Ireland, and sell its Spanish operations.

TAMPA -- Sykes Enterprises Inc. (symbol: SYKE) will soon divest its operations in the Netherlands, Ireland, South Africa, and Spain.

The Tampa-based customer management outsourcing firm outlined dramatic changes to its global business operations in a filing with the Securities & Exchange Commission made public this week. Its Spanish operation will be sold, while facilities in the Netherlands, Ireland, and South Africa will be shut down outright.

Through the first nine months of the year, Sykes says it generated about $922 million in total revenue, of which $18.9 million came from its combined operations in the Netherlands, Ireland, and South Africa. But that business segment was not profitable, instead creating a $2 million operating loss through Sept. 30. Sykes says it will transfer some business from its Ireland operation to other facilities, but will otherwise shut down a business segment that would have generated more than $23 million in revenues over all of 2011 if kept open.

Separately, Sykes says it will sell its Spanish operation, which generated $29.6 million in revenues through Sept. 30, as well as a $2.7 million operating loss. The company has set aside $300,000 for advisory fees associated with the sale of that segment.

Closing its operations in the Netherlands, Ireland, and South Africa could cost Sykes up to $8.4 million, and at least $6.2 million, the filing says. Much of those costs will be put toward severance fees, as the company expects to eliminate as many as 550 positions with its proposed changes. The financial impact of the Spain sale will not be known until a transaction agreement is reached.

In addition to changes to its foreign business, Sykes says it will spend between $2 million and $2.4 million to consolidate operations within the U.S. Those efforts are tied to the continued incorporation of ICT Group into Sykes' larger business. Sykes acquired ICT in 2009 for $263 million.

Sykes' stock price has held steady through Thursday morning trading, and is now at roughly $16 a share. This past summer proved a more tumultuous season for Sykes shares; in August, the company's stock traded below $11 temporarily, a month after being valued above $22.

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