About InterVoice-Brite

With 19,000 systems shipped to network service providers, financial institutions and corporations in more than 70 countries, InterVoice-Brite is the technology leader in speech-enabled interactive information solutions and a premier communications and e-commerce ASP.  Network-based enhanced service offerings include prepaid calling services, unified messaging, and intelligent network solutions.  Call automation solutions include interactive voice response systems, call center management products, and voice portal capabilities.  For more information, visit www.intervoice-brite.com.  

CEOCFOinterviews – Mr. Brandenburg, please give us a brief history of Intervoice-Brite, Inc., and where you expect to be in three years.

Mr. Brandenburg – “We are basically a software and professional services company.  We service the high-tech and communications marketplace. We’ve been in business since 1983, and we are a leading provider of network-based enhanced services for network carriers and ISPs and the number one provider of Interactive Voice Response (IVR) systems for enterprises.  We have a huge installed base of enterprise customers, which includes about 17,000 systems, 435,000 ports and 7000 customers in 55 countries.  We believe we have the opportunity to provide this base with voice-driven applications and portals.

In addition, we offer our installed base, and every potential customer, the choice between a system purchase and a communications application service provider (CASP) arrangement.  The CASP will be a driving force for our future.  It is an extremely exciting part of our business and may be a new concept for some of us in the industry to think about.  The concept is that we can provide several layers of managed services for our customers that lets them take advantage of our infrastructure to minimize their up-front investment and their long-term risk. They could buy the system and professional services from us, and have us host and manage it from our network operations center (NOC).  We could also manage it remotely at their site. They could also choose to buy only services and no systems. In this scenario, we would provide all of the systems and the hosting.  There is a wide range of options, which are priced accordingly.

Presently, we have invested in four accredited NOCs, which are in Cambridge and Manchester, England and Orlando and Wichita in the United States.  The infrastructure is in place and operational and providing more than fifty million dollars a year in revenue, mainly from customers of our Network Solutions division.  This is exciting because we are seeing increasing interest, not only from telecommunications carriers, but also from our speech IVR and traditional IVR customers -- and from our competitors’ customers.  InterVoice-Brite is the only company positioned to sell its products as systems or CASP sales.  As we move forward, this is a significant competitive advantage.  If the economy does soften with a recession this year, we are the only company with a cost-effective alternative to system purchase.”

CEOCFOinterviews – Please tell us about your recent restructuring?

Mr. Brandenburg – “We have two new divisions that service different parts of the market; our Network Solutions division and our Enterprise Solutions division.  They share some of our core technologies, such as digital signal processor or DSP technology, our advanced speech recognition capabilities and our application development tools.  They also share our CASP infrastructure. Our Network Solutions division sells to telecommunications carriers that are local, long distance and wireless carriers around the world.  This division will focus on prepaid wireless, messaging, our new unified messaging product, our new network voice portal product, enhanced operator services, and our new secure mobile commerce or m-commerce products. Our Enterprise Solutions division will focus on our advanced speech products and services that enable voice-driven applications and portals.

For both divisions, we’ll be offering these products, the expertise, applications and professional services as a system sale or as hosted applications.”

CEOCFOinterviews – On which markets will you, place your future focus.

Mr. Brandenburg - “Our future focus will be driven by the growth in the Internet, wireless and speech technology markets. I believe that the wireless phone will be the terminal of choice for obtaining information in the future.  The wireless phone will also perhaps become a PDA, a GPS terminal and an e-commerce wireless credit card as well.  We believe that there will be a billion wireless phones around the world within three or four years. And we are positioning all of our products and services and restructuring our organization to take advantage of the phenomenal growth in the worldwide wireless infrastructure, the Internet and the demand for services using advanced speech recognition. When people are on a wireless phone, most of the time they are in a position where they can’t use a keyboard, so they need speech recognition technology on the other end so they can get information, or to be switched to speak with a live person.  Most of our customers will be enhancing their systems with the speech recognition or speech user interface.”

CEOCFOinterviews – How big are your markets and what is your market share?

Mr. Brandenburg – “Our Enterprise Solutions market is probably a billion dollar a year market, and we own about twelve percent of the market share.  Our main competitors in that area are Avaya, which is a Lucent spin-off, IBM, and Nortel. These are all good competitors but interactive voice response is not their main business – and that is where we have the advantage. We have focused on self-service technologies for more than 17 years and feel that we understand the market place and customer requirements better than anyone else.  But our real competitive advantage is that these other companies only sell systems. We are the only company that offers the enterprise customer a choice - - to purchase the systems or to have us host their applications.”

“Our Networks business is a combination of prepaid wireless, unified messaging and voice mail.  The overall market for these product areas is approximately two and a half billion dollars.  Our biggest single competitor is Comverse Technologies whose primary focus is voice mail and unified messaging. To date, they have not offered CASP solutions. Another competitor, Boston Communications Group just remade themselves, but basically all they do is provide hosted services, mainly in the U.S. ”

CEOCFOinterviews – How do you plan to out do your competition and capture a greater part of the market share?

Mr. Brandenburg – “There are really two parts to our competitive strategy.  First, we are leveraging our experience in advanced speech recognition applications and user interface design to position us as the premier supplier of next generation communications applications – whether those applications be for an enterprise or for a telecommunications carrier.  Second, we believe we are unique in that we offer our customers a choice of application deployment options.  Our enterprise and network customers can decide to purchase and manage their solutions or they can outsource any or all of the solution to our CASP.  As more and more companies focus on their core competencies, this option to outsource will be critical.”

CEOCFOinterviews – What is your sales and marketing strategy?

Mr. Brandenburg – “It’s somewhat different for each division.  First, in our Network Solutions division, which potentially is the largest and fastest growing part of our business, we sell primarily through a direct sales force.  We have a global sales force with major offices in the U.S., the U.K., Germany, Singapore, Japan, South Africa and Brazil.  We sell direct except when we’re in countries and situations where we don’t have market experience or credibility, such as in Africa and some of the Asian countries.  In those situations, we will partner with major distributors such as Ericsson, Siemens or Marubeni. ”

 “The enterprise side of the business is a little different. Approximately fifty percent of our sales come through resellers.    Essentially all of our international business comes through resellers.  In North America, our direct sales force is complemented with major distributors such as Siemens and with vertical resellers like Symitar and Sungard.”

CEOCFOinterviews – Which division do you see as being the greatest revenue producer of the future?

Mr. Brandenburg – “Although we believe that the Enterprise side of our business will continue to see solid growth, we believe that the greater opportunity will occur in the Network Solutions business, and that is for a couple of reasons.  One is that the overall market is growing very fast.  When you look at how much wireless infrastructure is being deployed around the world, and you consider the crucial nature of enhanced services, the market estimates for unified messaging, for m-commerce and other mobility-driven services is not surprising.  We recently conducted research in both Asia and South America and confirmed that at least 40 to 50 percent of the carriers that we interviewed plan to deploy unified messaging in the next 12 months.    We see that marketplace growing between thirty and fifty percent.”

“The fact that we have the CASP business as a way of hosting all these enhanced services is a big plus for us, from both a revenue and a marketing sense.  As a marketing tool, it gives the customers the ability to quickly deploy critical new services with minimal risks and infrastructure investment.” 

CEOCFOinterviews – How much of your revenue do you put towards research and development?

Mr. Brandenburg – “We invest between eight and twelve percent of our revenue in R&D.”

CEOCFOinterviews – Are there any new products that will emerge from R&D spending?

Mr. Brandenburg – “On the network side, it’s been the Unified Messaging product.  We’ve just rolled it out and we are already working on the next version.  You will also see us applying speech recognition and speech synthesis technologies to deliver multi-media communications applications and portals.”

“Another area of investment will be secure m-Commerce capabilities.  One of the things that people will be using their wireless phones for besides PDA, telephone, and data, is for transactions.  It’s already happening in Europe.  The consumer can go up to a vending machine to buy a soda, load their cell phone memory with money from their credit or debit card, or communicate with smarter devices such as cash registers to do a transaction.   We are currently leveraging our existing pre-paid wireless platform, which is a transaction-processing platform, to develop m-Commerce capabilities.”

“Our R&D and speech groups are also in the process of developing VoiceXML products and tools.  Our winning InVision speech development tool is being enhanced to output VXML code and our core platform is being further enhanced to support the latest in speech technology that will allow us to participate in the new economy opportunities.”

CEOCFOinterviews – Do you also use acquisitions as a way to build your product pipeline?

Mr. Brandenburg – “Historically it’s been through R&D, but we did do a major acquisition about a year and a half ago with Brite Voice Systems and changed our name to Intervoice-Brite, Inc., which brought us a lot of good R&D technology.  We’ve also had a couple of smaller acquisitions.”

CEOCFOinterviews – Do you have an interest in making any more acquisitions?

Mr. Brandenburg – “ When we bought Brite last year we paid mostly cash and we did it through a loan.  We borrowed a hundred and thirty five million dollars to do it, and in a year and a half, we’ve paid down half of it, leaving our current debt at sixty seven million and a half.  So in the near term, we are focused on eliminating this debt.  Longer term, we do see possible strategic acquisitions as part of our commitment to innovative technologies.”

CEOCFOinterviews – Do you have the cash and/or credit to continue your growth?

Mr. Brandenburg – “At the end of last quarter we had about fourteen million in cash and we have a twenty five million revolving credit line.   Therefore, our cash situation is good, but we mainly direct our cash flow to pay down our debt.  We’ve paid down seven and a half million last quarter and we plan to pay seven and a half million down this quarter.”

 “The reason I’m on board as the Chairman and CEO, and I’ve been here for two quarters now, is to guide us through our restructuring, because we stubbed our toe in our May quarter.  The good point is that through all this we’ve had good cash flow, even though we had a revenue short fall for the last three quarters.  And I believe that we will see the turnaround in our fiscal first quarter, which starts March 1^st.  Other senior officers in the Company also share this belief as demonstrated by a great deal of insider buying recently.  It’s part of the public record over the last six months that I’ve personally bought over four hundred and sixty thousand shares of stock.”

CEOCFOinterviews – What final thought would you like to leave with potential investors and shareholders?

Mr. Brandenburg – “We believe that we are on course to be a very successful company.  We think that our current plan will work, but if for some reason it doesn’t, we will change it quickly and make it work.  The changes that we’ve already made will reduce our expenses significantly, and that is by sixteen million dollars for the next fiscal year. We’ve already put the new structure for our organization in place, focusing on high growth markets, with the right products in place and new products coming online.  We have everything that we need, so now it’s just a matter of execution, and we’re on target to do this by our first fiscal quarter.  In addition, if you were to separate our company into three different parts - the Network Solutions business, the Enterprise business and the CASP business - you would find each segment to be understated as compared to our competitors in that segment.  When investors and shareholders look at us, they should realize that we are in a fast and high growth business.”