Brite Voice Systems, Inc. History

Address:

7309 E. 21st Street, North
Wichita, Kansas 67026
U.S.A.

Telephone: (316) 652-6648
Fax: (316) 652-6800

Public Company
Incorporated: 1984
Employees: 751
Sales: $110.4 million (1996)
Stock Exchanges: NASDAQ
SICs: 7371 Computer Programming Services; 7375 Infor-mation Retrieval Services; 7372 Prepackaged Software

Company Perspectives:

Brite is committed to helping its customers prosper with voice processing systems and services that increase revenues or decrease costs. The collective expertise of customers, partners, and more than 700 Brite employees worldwide, will continue to be leveraged to create the solutions that bring people and information together.

Company History:

Serving the fastest-growing market in the world--the telecommunications and information services industry, Brite Voice Systems, Inc. is a global leader in the deployment of speech recognition for the wireless industry, and offers systems that integrate voice response, voice recognition, voice/fax messaging, electronic information, and audiotex systems (audiotex involves access to recorded, computer-stored information over the telephone). The company introduced voice dialing to the industry in 1993. Brite offers services to a wide variety of companies and communities, including wireless carriers, financial and health-care institutions, public utilities, telephone companies, newspapers and government agencies. Brite is a leading supplier of communications and information products and services in high-growth markets worldwide, including South America, the United Arab Emirates, South Africa, Asia, and the Middle East. European sales are made through Brite's subsidiaries, BVSGL (Manchester and Cambridge, England), Brite Voice Systems Group, GmbH (Wiesbaden, Germany), Brite Voice Systems S.p.a. (Rome, Italy), and Brite Voice Systems A.G. (Zurich, Switzerland).

Brite's Founder Links with the Computer Revolution of the 1970s

Described by an investment analyst as "one of the better visionaries," Brite's founder, president, and original chief executive officer, Stanley Brannon, initially tapped into the computer and information processing explosion of the late 1970s. According to David Dinell of the Wichita Business Journal, prior to founding Brite, Brannon tested his entrepreneurial abilities when he invested $1,400 of his personal savings to form Mycro-Tek Inc., which he later sold for $10 million--and which eventually went bankrupt under the new management. Assisted by five employees, the Wichita, Kansas native founded Brite in 1984. After going public in 1989, the company began its aggressive strategy of establishing alliances and partnerships in an attempt to expand its technical services and geographical positioning. Aiming to be less vulnerable to market trends or a single technology in an industry defined by extremely rapid shifts, Brite set its sites on diversifying products and services, while continuing to invest approximately 10 percent of sales on research and engineering.

The company entered the European market when it negotiated a deal with Ferranti Business Communications in Manchester, England, and acquired the assets of their voice systems group operating division. In 1993 Brite bought Perception Technology, adding additional products and expertise in the area of interactive voice response (IVR) and computer telephony integration (CTI). IRV and CTI applications use voice processing systems to link callers to various mainframe computer databases. Callers enter information through their touch-tone keypad or with voice commands, and can retrieve or change information by following prerecorded instructions. Examples of IRV and CTI include telephone calls to obtain an account balance, transfer funds, check on the status of a shipment, order a pay-per-view movie or enroll in a college class.

1990s Phone Shopping

Shopping by phone exemplifies another interactive system made possible by Brite technology, allowing consumers to place orders by using the buttons on their touchtone phones, or utilizing the option to talk directly to a customer representative. The world's largest electronic retailer, QVC, Inc., contracted Brite to install their BT III Voice Processor to automate the ordering process, increasing their order-taking capacity to over 40,000 calls per hour, and cutting by three times the expense of using the traditional operator-driven system. QVC handled almost 20 million calls automatically in 1994.

In addition to installing, maintaining, and repairing systems, through a geographically dispersed field service staff, Brite provides software support and a help desk for their customers. Customers are further supported by a training department which provides beginning and advanced training sessions for customers and employees in areas of software and technical development, product orientation, programming, and system operation. Brite's systems contain built-in modems, allowing convenient diagnostic back-up via remote communications between Brite's staff and its customers. Expertise is offered by company-sponsored technical/engineering consulting, made available to assist in the designing, engineering, procuring, and implementing of telecommunications services, networks, and equipment.

Cantel, the Canadian cellular company, implemented a Brite system that allows multiple language voice dialing, becoming the first cellular carrier in North America to offer their services with the option of either of their national languages, English and French. The two companies, Brite and Cantel, entered into a creative business partnership centered on new product development and revenue sharing. Representatives from both companies agreed to meet quarterly to assess technological developments and possibilities for improvements in cellular service. Brite instigated a similar relationship with Cellnet, the United Kingdom's leading cellular network operator. Cellnet installed a Voice Services Director providing a range of subscriber voice messaging services on Cellnet's Global System for Mobiles. Subscribers can access these services in 17 European countries outside the United Kingdom.

Managed Services, Brite Visions of the 1990s and Beyond

Envisioning a wider and more profitable market, the company shifted toward providing more managed services, i.e. custom audio information, a telephone-based system that is fed by satellite to newspapers, telephone companies, and others. According to company reports, "To support its electronic publishing customers, Brite has developed the industry's largest information services group to create content for audio, fax, and the Internet. Brite broadcasts audiotex programming over the industry's first digital satellite transmission network, ensuring crystal-clear audio quality." The company boasts the development of more than 600 new programs daily for English and Spanish audiotex networks. The report explains that "Outsourcing all technical requirements to Brite offers many advantages. Customers avoid using their capital on technical systems. They eliminate time-consuming budget approvals and equipment selection processes. They can create and offer new services without adding new staff."

Using Brite's products, Voice Directories and CityLine, publishers of Yellow Pages directories and newspapers offer categories of information at no cost to callers (revenues are generated by selling advertising sponsorships to advertisers), such as sports scores, weather, stock quotes, gardening tips, horoscopes, soap opera updates, and business news. Audiotex, Connect, and Select Series systems allow "talking Classifieds" providing readers and advertisers with efficient methods of researching, buying, and selling. Select Series provides an ideal consumer profile to advertisers via phone or fax. For example, Select Series connects the prospective car buyers "Ideal Wheels Profile" with the advertisers "CarSelect," narrowing the list of potential purchases to match appropriately-matched products offered. Similar systems coordinate house buyers with sellers, through "HomeSelect," and apartment-searchers with available rentals, through "RentSelect." Over 5,000 categories of information are produced with the help of Brite staff writers, editors, and broadcasters who create and load information into the system. Key customers and alliances include GTE, Sprint, the Washington Post, the New York Times, the London Financial Times, Tribune Newspapers, Fleet Services Corporation, Chemical Bank, Bank of Hawaii, PageNet, Airbourne Express, Intel, MCI, 3M, and many others. Company Audiotex revenues increased from zero to $1 million a month by 1994 according to their annual report for that year. Managed services largely accounted for a 42 percent soaring of overall Brite revenues, up from the previous year's sales of $46.9 million to a record $66.3 million--liberating the company from all debt.

Brite expanded its IRV and CTI capabilities in April 1995, when it acquired Touch-Talk Inc., a Dallas, Texas-based company which specialized in custom software and application development tools. This move expanded Brite's operations to include the telecommunications, financial, government, and wireless providers markets, and provided Brite customers a single vendor for all of their voice response requirements.

In July 1995 Brite acquired Internet Resources Corporation, another Wichita company and one that provided local access to the Internet. Internet Resources Corporation was founded in 1994 by Stan Marekl, a former vice president of new technology for Brite, according to Dennis Pearce in a Knight-Ridder/Tribune Business News report. The move sped the company into the Internet services sector, and within months the company bought a group of telecommunications companies, valued at more than $60 million. Comprising the group were Telecom Services Ltd. (TSL), Telecom Services Ltd. (West), TSL Software Services, and TSL Management group. Pierce explained that the companies provided service to several large enterprises such as J.P. Morgan & Co., Bank of New York Co., and Smith Barney Inc. Telecommunications services include billing verification to audit telephone rates, tariffs, taxes, surcharges, and other charges billed by telecommunications carriers and vendors. The company verifies that the client pays only for the services, circuits, and equipment it actually uses and for which it has been contracted; ensures that the proper rates are applied for taxes, tariffs, rates and surcharges; corrects billing discrepancies and prepares claims; and negotiates and collects refunds. Billing verification generally saves costs for the company's clients. Eight U.S. states and the federal Office of Veteran's Affairs began using Brite's utility billing verification, estimated to save 5 to 15 percent on their operating costs.

Added to their Internet access capabilities, Brite Internet services include search engine development, secured transactions, server usage, real-time audio via Iwave, complete digital audio production facilities, server-push animation software, forms processors, and audio/video services.

Brite's domestic sales are primarily made through a direct sales force, specializing in either industry, territory, or product line, with offices in Wichita, Kansas; Canton, Massachusetts; Dallas, Texas; New York City; Parsippany, New Jersey; and San Francisco, California. North American sales climbed steadily from $60.3 million in 1994, to $69.9 million in 1995, to $71.3 million in 1996. Companies such as Alltel, Amarex Technology, Inc., Digital Data Voice Systems, Intecom, Quotient Software, Inc., Southwestern Bell Telecom, and United States Advanced Networks utilize Brite hardware platforms for their integrated systems or services.

International sales rose more dramatically, from $19.6 million in 1994, to $27.14 million in 1995, to $39 million in 1996, amounting to between one quarter to one third of total revenues for those periods. Non-European out-of-country sales are made through the U.S.-based sales force, distributors, and local agents. Brite has speculated that Europe offers significant growth potential due to a lesser degree of audiotex and IVR systems penetration--and less competition--in that market. According to Brite's 1996 annual report the company's European subsidiaries "concentrate its efforts on five different vertical markets: telecommunications, home shopping, travel and transport, finance, and utilities. The company also relies on indirect distribution of its systems through prominent PBX manufacturers such as Philips, Ericsson, Telenorma and S.E.L." European sales of IVR and audiotex systems increased 95 percent between 1995 and 1996, and the company anticipates continued growth. In a March 1996 interview with David Dinell of the Wichita Business Journal, Brannon said that he predicted that the "company could grow to the $300 million to $500 million range in annual sales within five years." He explained that with stiffer competition in the United States, he expected the strong international markets to provide the growing edge. Dinell's article explains that, "In Europe, for example, the concept of consumer information through the yellow pages is still a new idea. Brite helped Telecom Italia set up an audiotex advertising product that is already common in many U.S. cities. That type of growth potential is ripe throughout the world, say Brite officials."

In the highly competitive market for voice processing systems Brite contends with companies such as Edify, Intervoice, Periphonics, Syntellect, and larger companies like IBM, Lucent Technologies, and Digital. Mail order providers such as Boston Technology, Comverse Technology, and Octel compete in the European arena. In the telecommunications management market competitors range from small localized companies to nationally-known firms such as AT&T, Electronic Data Systems, and IBM. Brite feels that its specialized expertise and reputation favor its standing in the marketplace, although increased competition from larger companies with greater resources than its own could affect future performance.

In a December 1996 interview Brannon told Molly McMillan of Knight-Ridder/Tribune Business News that he felt the need to hire a new Brite CEO, someone with experience broader than his own. He favored David Gergacz, the chief executive and president of Cincinnati Bell Telephone and founder of Sprint Corporation&mdash′imarily responsible for developing the first global fiber-optic network--and a member of Brite's board of directors. Gergacz is considered to have strengths in the technical and marketing aspects of telecommunications, someone who can also contribute his own network of sales and management contacts. In his short stint at Cincinnati Bell the stock rose from about $30 to $57 a share. Brite's stock had been dropping in the latter months of 1996 due to soft sales, but had risen slightly by the end of the year. Brannon plans to remain as chairman of the board, expecting to focus in areas where he feels comfortable--in new product development and acquisitions.

By July 1997 Brite planned to be moved into new headquarters in Heathrow, Florida, a suburb of Orlando, lured by $1.5 million in tax credits, easy airline access, and the advantages of close proximity to other high-tech companies such as AT&T and Sprint. It is estimated that only 30 to 35 top administrative, marketing, and management jobs would be moved, and the rest of the 240 Wichita employees would remain at the Kansas headquarters, which is the international headquarters for the company. The new location will include a Product Demonstration Center, designed to increase the company's sales effectiveness and leverage its existing worldwide sales growth. The company is reorganizing in an attempt to narrow its focus, increase its ability to serve existing customers, and allow Brite to lower costs while providing new products. In an April 1997 Brite news release Gergacz stated, "The combination of consolidating in a more strategic location and eliminating unprofitable ventures will position Brite to better capitalize on the many opportunities being presented in the rapidly growing global telecommunication and information market." He continued, "These actions, while detrimental to short-term results, are necessary in order to improve our long term prospects." First quarter of 1997 net income was $1.3 million, or 11 cents per share, compared to $2.7 million, or 23 cents per share, in the first quarter of 1996. Revenues from telecommunications consulting and customer-premise equipment sales fell below expectations, and the reorganization and relocation is a Brite strategy aimed at improving future financial results.

Principal Subsidiaries: BVSGL (England); Brite Voice Systems Group (Germany); GmbH; Brite Voice Systems S.p.a. (Italy); Brite Voice Systems A.G. (Switzerland).

Brite Voice Systems, Inc. History

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