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DailyTrends.com Company of the Week: UCN (UCNN) by Lahiji

Chris Lahiji
Chris Lahiji
Daily Trends.com
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UCN (formerly Buyers United) is a reseller of on-demand contact handling software and telecom services, including long-distance, data, and network services. The company sells its service packages to business customers in the U.S., currently long distance services comprise a major portion of its sales.

Everyone here knows that long distance is not the growth story it was 10-15 years ago, when companies like AT&T and Bell South charged people .50 cents a minute to call grandma in Texas via California.

Nowadays, things are shifting over to broadband and people are placing calls over the Internet. The phenomenon is called VoIP (Voice Over Internet Protocol). The media talks about VoIP and how it will be revolutionary for the residential market. UCN however thinks that the change will be even more prodigious in business.

They have created a new product called inContact, which will change the Call Center market as we know it. This is especially true for the smaller players, which is great given the fact that 90% of call centers have less than 100 agents.

I spent time this week, with the CEO and President of the company, Mr. Paul Jarman to discuss the future of his company.


INTERVIEW

Chris Lahiji (DailyTrends.com): Paul, when was the company founded and what services did you provide for consumers back then?

Paul Jarman (CEO of UCNN): Buyers United was formed in 1997 as a reseller of Long Distance services, including voice, data and dedicated internet services. We officially changed our legal name to UCN, Inc. in 2004, reflecting a change in our business model.

Lahiji (DailyTrends.com): What products and services do you provide today? Has a lot changed in the past five years?

Mr. Jarman: A lot has changed. In 2002 we purchased one of the first, commercial nationwide IP networks, from a company called iLink. In 2003 we negotiated a marketing agreement with a company called myACD, giving us the rights to purchase their advanced contact handling software. We executed those rights the first week of January, 2005. We now own a nationwide IP network and a set of advanced contact handling features, reporting tools and development tools which we deliver over that network. These on-demand software services represent our new product line we call inContact. During 2003 and 2004 we spent significant engineering effort integrating the software into the switching fabric of our national IP network to create a redundant architecture at three levels redundant connections between our server centers, ability to failover our hardware to back facilities, and the ability to failover the software services to our backup facility. We have gotten feedback from more than one industry analyst that the step we are taking to create to reliable, redundant infrastructure puts us ahead of our competitors. During 2004 inContact won two industry innovation awards; one from the leading Call Center show in Dallas; the other at the spring Internet Telephony show.

Lahiji: Please describe inContact in more detail. How many companies have you signed up using inContact? How many do you expect in 2005?

Mr. Jarman: InContact is our on-demand, contact handling application suite that supplements existing phone systems with advanced contact handling features such as self-service interactive voice response, skills-based routing tied to a database enabling time-saving screen pops, the ability to handle on-hold calls in our network, eliminating the need for our customer to build-out call-holding capacity onsite, plus more. InContact improves the productivity of those who handle customer contacts at their company which could be customer service reps, order entry people, inside sales, a support desk, or most any group of 10 or larger handling inbound and/or outbound contacts. There are 1000s of call centers that do not have access to advanced contact handling technologies because, traditionally, they had to acquire these features as onsite software and hardware purchases, which requires a hefty upfront capital equipment investment, plus systems integration costs and ongoing maintenance fees. We change that model -- allowing the smaller business to gain access to all of these advanced technologies by simply connecting to our network, as you would connect to a long distance provider, only paying for what you use on a monthly basis. To your business growth question since we are publicly traded, I will have to keep my comments focused on what we have reported publicly to date. At the close of 3rd Quarter, 2004, the most recent reported quarter, we signed 48 new sales partner agreements which included one of the largest VAR firms in the US - SolarCom. This is in addition to 37 new partner agreements signed in the second quarter. We signed over 300 new business accounts during Q3, representing a mix of long distance and inContact customers. I can say we more than doubled our total inContact customers in Q3 compared to Q2. We are on track to demonstrate nearly the same momentum in Q4. During Q3, we also signed a joint marketing agreement with Right Now Technologies, a leading provider of hosted customer relationship management or CRM products. They have found the need to supplement their CRM software with a contact handling solution. We expect to jointly close opportunities for customers seeking the combined solution during Q4 and beyond.

Lahiji: Describe the recent financial activities that have taken place. How are these going to help the company moving forward?

Mr. Jarman: We have had two major stock-related activities in the past two months that have significantly improved our financials. During the quarter ending December 31, 2004, 2.1 million warrants and employee options were exercised, generating $3.6 million in cash for the company. In addition, investors holding $712,500 of UCN promissory notes payable elected to exercise their option to convert their notes into 356,250 shares of common stock. This exercise of warrants and options enhances our balance sheet and improves our working capital position. Additionally, on December 29, 2004, UCN gave notice to Preferred stockholders, informing them the company was redeeming all outstanding Preferred shares. By the end of January, all holders of our 8% Series A and B Convertible Preferred Stock elected to convert their Preferred shares into 3.7 million shares of Common Stock. This will save us approximately $50,000 per month in expense applicable to common shareholders.

Lahiji: What do expect to do with your long distance business? Is it still making money?

Mr. Jarman: The long distance part of our business remains profitable; we will continue to grow our business customer base and leverage that base by up selling our inContact technologies to this group.

Lahiji: Finally, what are your goals for UCN in 2005?

Mr. Jarman: One of our main goals in 2005 is to significantly increase the market awareness for our inContact product line. We have begun to invest in marketing and sales programs to meet that goal. Plus, we will continue with the necessary product development to remain a market leader in this area.


END OF INTERVIEW


I personally believe that the company is worth taking a close look at these levels as inContact makes a splash in the call center market. It is a very novel product that has cost savings like nothing else in the market.

I am betting that Mr. Jarman will provide more applications over VoIP in the future, and that will not only boost revenues but help improve margins.

Chris Lahiji will be available to take your questions until Thursday, February 24. Please use the form below to submit your questions.

 
 
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