TeletechCorporation 16
Teletech Corporation, 2005
Raider Dials Teletech
“Wake-Up Call Needed,” Says Investor
New York—The reclusive billionaire Victor Yossarian has acquired a 10 percent safe in Teletech Corporation, a large regional telecommunications firm, and has demanded two seats on the firm's board of directors. The purchase was revealed yesterday in a filing with the Securities and Exchange Commission, and separately in a letter to Teletech's CEO, Maxwell Harper. ‘The firm is misusing its resources and not earning as adequate return,” the letter said. "The company should abandon its misguided entry into computers, and sell its Products and Systems segment. Management must focus on creating value for shareholders.” Teletech issued a brief statement emphasizing the virtues of a link between computer technology and telecommunications.
Margaret Weston, Teletech Corporation’s CFO, learned of Victor Yossarian’s letter late one evening in early October 2005. Quickly, she organized a team of lawyers and finance staff to assess the threat. Maxwell Harper, the firm's CEO, scheduled a teleconference meeting of the firm’s board of directors for the following afternoon. Harper and Weston agreed that before the meeting they needed to fashion a response to Yossarian’s assertions about the firm’s returns.
Ironically, returns had been the subject of debate within the firm's circle of senior managers in recent months. A number of issues had been raised about the hurdle rate used by the company when evaluating performance and setting the firm’s annual capital budget. As the company was expected to invest nearly $2 billion in capital projects in the coming year, gaining closure and consensus on those issues had become an important priority for Weston. Now, Yossarian’s letter lent urgency to the discussion.
In the short run, Weston needed to respond to Yossarian. In the long run, she needed to assess the competing viewpoints on Teletech’s returns, and she had to
244 part Three
Raider Dials Teletech
“Wake-Up Call Needed,” Says Investor
New York—The reclusive billionaire Victor Yossarian has acquired a 10 percent safe in Teletech Corporation, a large regional telecommunications firm, and has demanded two seats on the firm's board of directors. The purchase was revealed yesterday in a filing with the Securities and Exchange Commission, and separately in a letter to Teletech's CEO, Maxwell Harper. ‘The firm is misusing its resources and not earning as adequate return,” the letter said. "The company should abandon its misguided entry into computers, and sell its Products and Systems segment. Management must focus on creating value for shareholders.” Teletech issued a brief statement emphasizing the virtues of a link between computer technology and telecommunications.
Margaret Weston, Teletech Corporation’s CFO, learned of Victor Yossarian’s letter late one evening in early October 2005. Quickly, she organized a team of lawyers and finance staff to assess the threat. Maxwell Harper, the firm's CEO, scheduled a teleconference meeting of the firm’s board of directors for the following afternoon. Harper and Weston agreed that before the meeting they needed to fashion a response to Yossarian’s assertions about the firm’s returns.
Ironically, returns had been the subject of debate within the firm's circle of senior managers in recent months. A number of issues had been raised about the hurdle rate used by the company when evaluating performance and setting the firm’s annual capital budget. As the company was expected to invest nearly $2 billion in capital projects in the coming year, gaining closure and consensus on those issues had become an important priority for Weston. Now, Yossarian’s letter lent urgency to the discussion.
In the short run, Weston needed to respond to Yossarian. In the long run, she needed to assess the competing viewpoints on Teletech’s returns, and she had to
244 part Three