SEC Filings Section 16 Filings Only
 
PFSWEB INC filed this 8-K on 03/31/2006.
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You know, the — one of the — one of the other things is that we had quite a few companies over the last three or four years that have not provided the kind of quality service and results on an outsourcing basis that companies need. And much like you saw in the ‘80s with the direct marketing industry, it only really takes one or two guys to tarnish a trend — one or two companies that perform poorly to tarnish a trend in the business. And I think we experienced some of that in this arena where we’ve had some shakeout, we’ve had a number of companies that have gone away. And I think you’re seeing an emergence of some high-quality providers in the business right now, ourselves being one, and the reputation of the capability of us as a full-service outsource provider is growing. And I think that that will ultimately fuel trends as well.
JACK ANDREWS: OK. And then could you talk a little bit more about the financial impact of some of these contracts in the pipeline. I think previously you’ve talked about pursuing larger deals which, you know, may potentially mean lower gross margin profile. I was wondering if you could just, you know, expand on the — you know, the — if there is a potential difference in the mix of these deals.
MARK LAYTON: The larger deals are typically at lower gross margin percentage. You know, it’s obviously higher gross margin dollars, but lower percentage. And, you know, we — what we have found, as I mentioned in my prepared comments, is that there are more attractive financial characteristics of the larger deals for us than there are for some of the smaller ones. Much like an acquisition, it’s almost as hard to do a little one as it is a big one.
JACK ANDREWS: Sure.
MARK LAYTON: And so these integration efforts that we end up doing with some of the smaller contracts, you know, there’s an opportunity cost in terms of the deployment of the people and resources that we put them. And then, you know, the actual dollar rewards are not all that great when you’re said and done with them. So that’s the reason we want to continue to focus on larger contracts. And they probably are going to be in the 20 to 30-percent gross margin range as opposed to where we were at a few years ago focusing on 30 to 40-percent gross margin. So that’s the trend in our service fee gross margin area.
JACK ANDREWS: OK. And then just one last question on that point. Would the lead time to implement these deals, is that similar to your historical, you know, kind of nine-month-or-so time to get these contracts fully ramped?
MARK LAYTON: Yes.
JACK ANDREWS: OK. And then just on the $4 to $7 million of cap ex for 2006. Does that include the potential investments related to eCOST that you’re currently working on?
THOMAS MADDEN: Yes, it does. Those investments are not expected to be significant, though. It’s not — it’s not a big component of that number.

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