StarTek, Inc. Message Board

  • kippb kippb Sep 12, 2006 1:46 PM Flag

    Cost of Revenue increasing

    SRT Cost of revenue has been historically around 75% of sales.

    The last 3 quarters, it's been rising. From 77% to 82% to 86% for the last quarter.

    Any insight on what is causing this? Labor increases?

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    • Lets see in reply to your question.

      1. In the last 6 months-Funded 3 new call centers out of Operating cash - Vs. - leveraging in with LTD to set up and equip call centers. This would include facilities, equipment and personel that needed training.

      2. Last quarter actual earnings to divided among the stockholders was $.14, however, management did not want the stockholders dividend to suffer, bit the bullet, and paid out the average $.25, and frankly the only way to do that was to invade available cash - which if you can read a finacial statement stands at about 3:1 and is very healthy indeed. Management is putting their butts on the line declaring extraordinary dividend earnings - so keep in mind that Management, BOD, and employees within the Company are all gambling their futures in this expansion. Management absolutly abhors Long term debt, and frankly for a service company - IMHO damn good thinking. It makes the difference in lean times of the industry cycles- the good survive and the leveraged disappear.

      So the Question: Is management right? Can they pull it off profitably and increase stockholder value.

      Short reply: If not - why would they have embarked upon this expansion? - may be a short term disruption of cash flow while expansion is completed, but history of the company indicates managements ability to exploit opportunities in the market as demand increases when the competitor's inefficient/large Debt companys dwindle and go out of business which then decreases supply of these type of services, and makes surviors that much more valuable. Is this company positioned to survive- My purchase of shares says Yes. Take a look at a chart on this company- easily 100% increase in stock price value if the company holds its own record. Be patience- not a short term stock.



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