TSIG...CEO interview...this one is going to be hot, if we break .50 there is no resistance to $2 and feel with other internet valuations this should be worth a whole lot more.
Brett
April 3, 1998
C.E.O. INTERVIEW
TeleServices International Group Inc.
(OTCBB:TSIG)
On March 12th TeleServices International Group announced that it had acquired Compact
Connection, Inc., a leading wholesaler of compact discs and cassette tapes, subject to an audit of
financial statements and due diligence review. Compact Connection has reported that its 1997
revenues were approximately $14 million with $1.4 million in net profit and the Company projects
$35 million in revenues this year. The following interview is with Darrell Piercy, chief executive
officer of Compact Connections, who explains exactly how his Company plans to attain its goals.
Please note that TeleServices has been selected as a "featured company" for the nationally
broadcast television program entitled "Emerging Public Companies - The Story Behind the
Symbol", which will be carried to 65 percent of the top 215 Designated Market Areas in the
United States. It is scheduled to air during the second quarter of this year.
O&A by Andrew Schamisso, Vice President, VistaOuest, Inc.
VistaQuest
Please tell us about your company.
Darrell Piercy
We started selling musical compact discs and cassette tapes at wholesale
prices in 1993. Today, we have over 200,000 titles, which covers every
category of music including new releases. The niche market that we have
carved our for ourselves revolves around the Compact Connection Music
Card, which is what we sell to consumers enabling them to purchase CDs at
wholesale prices.
VistaQuest
What does the card entitle customers to?
Darrell Piercy
The card typically sells for $10 and entitles consumers to buy up to 50 CDs at
$9.99 per CD, about a $5 savings, for a total savings of $250. Currently, they
are being marketed to over 200 dedicated distributors that we have across the
country. The distributors then sell the card direct primarily through fundraisers,
which raised millions of dollars last year for various school groups, colleges,
etc.
VistaQuest
To what do you attribute your impressive growth in revenues?
Darrell Piercy
Well, first off, we don't lose customers. The same customers I had in 1993, I
have today because they are drawn to the card.
VistaQuest
What is your retention rate?
Darrell Piercy
It's very close to 90%.
VistaQuest
How many cardholders do you currently have?
Darrell Piercy
We currently have 1.5 million and get 2000-3000 new customers every day.
VistaQuest
Do you have any inventory?
Darrell Piercy
Only a small amount. The majority of our shipping is done through our
suppliers and they get the shipping and handling money for a little profit and
handle all fulfillment.
VistaQuest
You've already had impressive growth and you intend to more than
double from here in one year? How?
Darrell Piercy
Our new parent, TeleServices, would allow us to market directly because we
can now handle the call volume. So, very soon, you are going to see national
television and print campaigns offering our cards with TeleServices 800
telephone number and, if you're a music lover, I am confident that you'll love
the value.
VistaQuest
In what markets will you roll out the TV advertising?
Darrell Piercy
Our commercials will roll on MTV, VH1 and various cable outlets.
VistaQuest
What is your 1998 and 1999 advertising budget?
Darrell Piercy
Our budget is for $2 million in 1998 and $5 million in 1999.
VistaQuest
Are there any unique challenges facing TeleServices' call center with
regard to this new market?
Darrell Piercy
There are only exciting ones. Figuring out how best to handle 10,000 calls per
hour would be a good problem to have.
VistaQuest
In the acquisition release, there was mention of a dedicated website.
Please describe.
Darrell Piercy
We are currently under construction and should be up and running to coincide
with our advertising blitz.
It is going to be a phenomenal site where consumers will be allowed to buy
their first CD for $9.99 which is about $4 less than I've seen on the net and, if
they want to continue to get CD's at that price, they must purchase the card
directly from the internet site as well.
VistaQuest
In this crowded, tight-margined internet-music market, how are you
going to maintain savings to the consumer without affecting your
bottom line?
Darrell Piercy
Everything revolves around the card. We have a $10 item from which were
generating revenues that costs us little and saves consumers close to $300.
Bottom line is our price will be $3 to $4 cheaper than the competition. Plus,
I'm not going to be selling CD's direct unless they purchase the card.
Therefore, the margins that other companies work off are affected by the fact
that they do their own shipping and storage. Other companies have overhead
that we don't have.
VistaQuest
What is the average dollar sale per customer?
Darrell Piercy
$20 per customer. However, if you include the average of all 50 cd purchases,
it's over $500.
VistaQuest
Will you maintain your 10% bottom line?
Darrell Piercy
It will probably be a little higher this year. Through our distributors, we only
receive about $2 per card. By selling direct, we're getting $10. Obviously,
there are some new things we have to pay out of that, but the net profit on the
cards will probably be $6-$7.
VistaQuest
One million new buyers equals $20 million in revenues, $7 million to
the bottom line. And you believe you can sign up 5 million new
customers and generate $100 million in revenues per year - is this
correct?
Darrell Piercy
Yes, We plan to be generating revenues at the rate of $100 million per year
within 18 months.
For more information on TeleServices International Group Inc., please contact:
Andrew Schamisso,
Vice President,
VistaQuest Financial Public Relations,
at 212.551.7874 or
fax 212.551.7837. |
