2 April 2003 Altitude Software, the once high-flying call centre software supplier, has been rescued from bankruptcy.
The Lisbon-based company, which went into receivership last month after burning its way through €78 million in funding over four years, has been acquired by a consortium of Iberian venture capital groups and banks for an undisclosed sum. Original investors included SAP and Intel.
New CEO Gastão Taveira, a former McKinsey consultant who previously ran the retail IT services company Enabler, instigated the buy-out after recognising the potential of Altitude’s 600-strong customer base that includes BT, Vodafone, Credit Agricole, Coca Cola and the Saudi British Bank.
“After we clean up the balance sheet, we will be cash positive this year and our cash burn has stopped,” said Taveira. The company’s new capital base stands at €8 million.
That cash burn rate had clearly got out of control. In a breakneck expansion phase, the company opened 18 offices in 14 countries and increased its workforce to 370.
That was meant to be supported by a €150 million initial public offering on the Amsterdam Euronext market, but the flotation was withdrawn in late 2000 as world equity markets crashed. In addition, revenues, which almost doubled in 2000 to reach €32 million, suddenly went into sharp decline.
Taveira suggested that the company now has a revenue base of about €20 million, after having resolved revenue recognition problems in Latin America and bad debt issues that involved defunct customers such as WorldCom. Half the offices have now been closed and staff levels reduced to 200.
Currently, 45% of revenue comes from Portugal and Latin America, with most of the remainder derived from elsewhere in Europe. Operations in the US and Asia, at one time vast investments for the company, have been scaled back dramatically.
In addition to the over-ambitious expansion, Taveira identified a miscued diversification into other areas of customer relationship management (CRM) as another major factor behind the company’s descent. As well as draining research and development resources, it made competitors of some of its partners in CRM.
Furthermore, decision-making at board level had become sclerotic. “Altitude had a very complex shareholder base of 20 investors which meant it took too long for them to take the necessary measures for the changing market conditions,” says Taveira.
Revenues are now split almost evenly between the company’s earlier generation voice product, EasyPhone, and its multi-channel product, uCI (Unified Customer Interaction), a contact centre package for handling voice, email, web collaboration, chat and interactive voice response.
According to Taveira, the company, which competes against the likes of Avaya, Alcatel’s Genesys subsidiary and Divine’s eShare unit (also in the throes of bankruptcy), “has not lost a single existing customer”, though its previous financial position triggered many customers and prospects to postpone purchases.