Companies outsource customer care, human resources and billing services to Convergys Corporation (NYSE: CVG), which posted solid 1Q 2007 earnings for both its domestic and international units. Revenue for 1Q 2007 was just under $720 million, an increase of 7% from 1Q 2006. Likewise, EPS diluted was $0.31, up 19%. Operating income increased 5% to $65 million. Net income increased 19% to $43.6 million. It remains to be seen if Convergys can continue to post solid gains under its brand new CEO Dave Dougherty, who took over on 17 April 2007. Bets are that the company can and will.

In Convergys' customer care segment, revenue was $469 million, up 8%, and operating income of $56.3 million was up 22%. The employee care segment showed impressive gains of 24% in revenues, to $65 million, Due to careful cost management programs, Convergys slowed operating losses in this segment by 23%, but still showed a loss. Information management segment showed a 2% loss, due mainly to the loss of the Cingular account when Cingular became a wholly owned subsidiary of AT&T. To compensate for this loss, Convergys has actively expanded its international operations in information management.

Convergys increased its cash flow from operating expenses while simultaneously trimming net expenses due to a reduction in debt interest expenses. During 1Q, Convergys spent over $16 million to repurchase 638,200 shares at an average price per share of $25.60. Based on 1Q numbers, Convergys management is sticking with its FY 2007 guidance of at least $1.20 EPS. At a recent closing of $25.75, up $0.16, Convergys at least rates a look from investors who have yet to spend their tax refunds.