Can Workstream Hang On?

Jun 3, 2008
This article is part of a series called News & Trends.

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 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.

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,, 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.

This article is part of a series called News & Trends.