Can Workstream Hang On?

Battered by losses running into the millions, talent software provider Workstream (profile; site) is asking vendors to renegotiate bills as it struggles to lift its stock price above $1 a share.

A publicly traded company headquartered in Ottawa, Workstream sells a suite of over-the-web talent management products and also owns 6FigureJobs.com and Allen and Associates , a candidate focused career management firm. In fiscal year 2007, which ended May 31, 2007 Workstream had an operating loss of $11.1 million on revenues of $29.3 million. This year through the company’s 3rd quarter, which ended Feb. 29th it had lost $15.5 million on revenues of $20.6 million.

In November the company was notified by NASDAQ, where its stock trades, that it was in danger of being delisted by the exchange because the per share price had fallen below $1 for 30 consecutive trading days. On May 20th, with its stock closing at 50 cents a share, Workstream got a six month extension from NASDAQ. It now has until Nov. 17th to lift its per share price above $1 for 10 consecutive trading days in order to remain a listed stock.

Meanwhile, the company is in the process of a merger with Empagio , itself a human capital management and outsource payroll company based in Orlando, Florida. The merger offer from Empagio was announced by Workstream at the end of 2007 and approved by the Workstream board early in the year. The deal gives Empagio 75 percent of the merged company.

Although a Workstream press release from February says there is a “definitive agreement” between the two companies, in at least one conversation with creditors a Workstream official said resolving past due bills was important to moving the merger forward.

Calls and emails to executives at Empagio and Workstream were not returned.

Jason Corsello, vice president, Center of Excellence at Knowledge Infusion, said the current state of Workstream’s finances puts it in a precarious position. Complying with the NASDAQ requirements amid mounting financial losses “looks very challenging,” he said, though it could be achieved by a reverse stock split.

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The company, which at one point “had some good products” is losing market position every day, Corsello told us. “They haven’t been so visible for a while now. So I would have to say they are in a tough position.”

In the fall, Workstream released a set of integrated talent products under the name TalentCenter 7.0 that gained it complimentary review. Leighanne Levensaler, principal analyst with Bersin & Associates, was quoted in InfoWorld calling it a “truly integrated” HR platform and “not just a bunch of disparate applications.”

TalentCenter 7.0 weds the offerings from the companies that Workstream acquired during a buying spree between 2002 and 2006. Among the companies it bought were Paula Allen Holdings, 6FigureJobs.com, RezLogic, ResumeXpress, Peopleview, Bravanta and HRSoft.

Whether the new offering can gain traction quickly enough is a big question, especially given the turmoil in its executive suite. In the past year, Workstream has seen almost a complete turnover of its executive team. For instance, Deepak Gupta, appointed CEO in February 2007, was gone less than a year later. Philip Oreste was appointed CFO in June 2007. He, too, is gone.

“Now that the entire management and sales team is essentially gone, they have lost all goodwill and have become practically invisible in the market,” says Corsello.

John Zappe is the editor of TLNT.com and a contributing editor of ERE.net. John was a newspaper reporter and editor until his geek gene lead him to launch his first website in 1994. He developed and managed online newspaper employment sites and sold advertising services to recruiters and employers. Before joining ERE Media in 2006, John was a senior consultant and analyst with Advanced Interactive Media and previously was Vice President of Digital Media for the Los Angeles Newspaper Group.

Besides writing for ERE, John consults with staffing firms and employment agencies, providing content and managing their social media programs. He also works with organizations and businesses to assist with audience development and marketing. In his spare time  he can be found hiking in the California mountains or competing in canine agility and obedience competitions.

You can contact him here.

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