Witness Systems Inc.’s acquisition of two branch-staffing software vendors this month received mixed reviews from analysts.
The Atlanta vendor of “workforce optimization” software for call centers acquired Demos Solutions Consulting Group Ltd. of Norwell, Mass., and its chief competitor, Exametric Inc. of San Diego, this month for $29 million in cash. The sellers may get up to $18 million more, depending on the growth of the business over the next few years.
Both Demos and Exametric provided systems to enable branch managers to manage staff scheduling by analyzing patterns of customer traffic to identify busy and slow times. Demos’ clients included Wachovia Corp. and SunTrust Banks Inc. Exametric’s included Wells Fargo & Co. and Huntington Bancshares Inc.
In an interview Tuesday, Darryl Demos, the founder of Demos Solutions, expressed confidence that Witness would be able to offer better products to customers.
“We will be migrating to a best-of-brand platform, best-of-brand functionality,” said Mr. Demos, who is now the president of Witness’ enterprise solutions group.
Witness plans ultimately to merge the two sets of offerings into a single system, which would be available either as licensed software or as a service hosted by the vendor, but Mr. Demos said Witness has a “100% commitment to maintaining” the current offerings.
Nancy Treaster, Witness’ vice president of global marketing, said Ali S. Kiran, the founder and chief executive of Exametric, will serve on an Witness advisory committee but will not be involved in the company’s management.
Daniel Ives, a financial analyst at Friedman, Billings, Ramsey & Co. Inc., said in an interview Thursday that Witness could face difficulties from the acquisitions, which take the vendor “away from their core competency, the call center.”
When the deals were announced this month, he downgraded Witness’ stock to “market perform,” from “outperform,” because in the press release announcing the deals, the company also lowered its third-quarter revenue projection to $50 million to $51 million, from earlier guidance of $52 million to $53 million.
Ken Landoline, a senior analyst at Yankee Group Research Inc., said the deals had surprised him, but the sellers handle “exactly the same issue” as the buyer, so “it makes natural sense.”
