Mr. Doyle: The predecessor company was Mail.com, and, as many Internet companies did, it started with a very good idea that ultimately, in its initial form wasn't something that was going to realize near-term success. Mail.com was the ultimate purchaser of the EasyLink division from AT&T, and the name changed in 2001 from Mail.com to EasyLink. The initial EasyLink company had with it, in addition to the legacy messaging business in the AT&T company, a substantial amount of debt that was leftover from the Mail.com days. So when you look back historically at the financial changes and growth of the company, you also need to understand the context and root of a substantial amount of debt and a declining revenue base that came with Mail.com and some of the legacy messaging business too. In a matter of four years, we have shed a substantial amount of debt from the Mail.com days and are in a good position financially coming off of our first full profitable year in 2004. We are now at the crossroads of moving from legacy-based services that we label transaction delivery to looking for 2005 to be a year where we significantly grow our transaction management-based services, which is the growth base of the company for the future.
TWST: What things were done that caused the problems that the company
had, and how did you dig your way out? What were the key elements in
turning things around?
Mr. Doyle: I have only been with the company for about one year but I
think the challenges that the management teams faced in 2001 to about
2003 were trying to shed the debt overhang, which was a significant
drain on the cash of the company. So they had a very immediate challenge
of dealing with that debt, which in many instances was a number of debt
restructuring deals and resulted in debt for equity swaps on more than
one occasion. That's one aspect of it. Another aspect was dealing with
an overhead structure that, frankly, wasn't profitable from a business
perspective, so there were a number of changes and restructuring that
had to take place internally in order to get EasyLink to a point where
it was profitable. So in dealing with that, one of the things they faced
was missing out on some near-term opportunities in order to get the
company profitable and cash flow positive so that it could survive and
move forward as an entity. Those were the early challenges along with
what we saw a fair amount of last year, which was developing replacement
growth products for the legacy business. In the early forms of EasyLink,
the value was in the communications pipes. So if you think back to the
AT&T days, their ability to deliver a message over their network was the
value; the network was the concept that had value, whether it was in the
form of delivering a fax message or telex or EDI. You can see just by
the changes in the telecommunications business, there's not as much
value in the network as there used to be. The network has become a
commodity, and you see that in what we do today, which is buying our
network time from a variety of carriers, including AT&T, MCI and people
like XO. So that's no longer the value add in the network; it's the
commodity, which is why there is the downward pressure on pricing in the
legacy services. The real value for the business going forward is on
message enhancement ' being able to do things with the message, being
able to insert yourself into a company process to help them facilitate a
smoother or quicker process or to change the way it's done
fundamentally.
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