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PhoneLink profitability in sight says CEO

Acquisition strategy drives return to the black -- but not this year

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"We've been described as a stock-market dog," said Graham Ramsey, CEO of PhoneLink, the loss-making Tel-Me online content provider, "but our acquisition strategy is working and we're very bullish about the future." In 1996 PhoneLink reported £4 million turnover and a £7 million loss. By March 1997, turnover was static but the loss doubled to £6 million. By March 1998, the loss was only £3 million, but then again, so was turnover. Come August 1988, turnover shot up to £55 million and the newly made-over company said it was poised to move into profitability. "We had to generate organic growth but we knew it wouldn't be enough," explained Ramsey, who was brought in to mastermind PhoneLink's recovery and acquisition strategy, and the company paid around £16 million for two very profitable businesses, GB Mailing and Seaforths Travel Agency. Both deals included deferred and share elements, but Ramsey said the share swaps indicated mutual confidence, and that PhoneLink's current wellbeing justifies that confidence. The Seaforths Travel Agency has an online commerce product called Ticket Window that interfaces with the Galileo reservation system and PhoneLink integrated it with the Tel-Me service. "Over the past 18 months we've seen 20 per cent of business come from Seaforth," said Ramsey, and PhoneLink has picked up a raft of awards for Seaforth, including the Service award in BT's Electronic Business Awards for Innovations in E-Business. Electronic business is a growth area for PhoneLink and the company is hatching new products and services. The second acquisition, GB Information Management, specialises in addressing systems and they dovetail neatly with PhoneLink's bureau telephone numbering services. So is it all rosy again at the one-time high flier? No, not quite, according to Ramsay. The company is due to report in December and it's in the closed period now, unable to make any financial forecasts, but Ramsay confirmed that the core business remains unprofitable. PhoneLink employs 220 staff, no change from 1996, but it has shed over 170 employees and implemented stringent cost-cutting in the core business, according to financial director Richard Law. Ramsay is confident that the business will be profitable, but its recovery may owe less to the original Tel-Me technology than to the added value systems from Seaforth and GB Information. Input from acquisitions has fuelled PhoneLink's recovery, and while Ramsay sees lots of opportunities for dynamic growth, "we won't discount future acquisitions," he said. PhoneLink has still to convince the market and its share price, once an over-hyped £4.40, hovers around £0.40 today. ® Click for more stories

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