ELoyalty Announces First Quarter 2011 Results

On March 17, 2011, eLoyalty Corporation signed a definitive agreement tosell its Integrated Contact Solutions business unit and "eLoyalty"registered trademark / trade name to a subsidiary of TeleTech Holdings,Inc. As a result, the company has classified the ICS business unit asdiscontinued operations and the associated results of operations, financialposition, and cash flows have been separately recorded as the case may be.

The divesture of the ICS business

Upon completion of the divesture of the ICS business, the remaining entitywill operate pursuant to this agreement the name Mattersight Corporation. Mattersight™ willbe a leader in enterprise analytics as a service. The cornerstone of thecompany's business is its Behavioral Analytics Service. BehavioralAnalytics captures, analyzes, and creates insight from unstructuredconversations, emails, and employee desktop activity.

Based on strong bookings the company achieved in the last two quarters of2010, and its continuing strong pipeline, the company expects Mattersightto achieve a significant increase in its subscription earnings over theremainder of 2011.

The strong revenue growth over the then three quarters is expected to drivesignificant operating leverage. Offsetting some of this increased operatingleverage, will be the investments the company expects to make to buildMattersight's sales team and develop additional product functionality.

The company currently expects its Q2 Behavioral Analytics services revenueswill be roughly $6.7 million and its Q2 ICS services earnings will beapproximately $12.0 million.

eLoyalty enables its clients to achieve breakthrough results withrevolutionary analytics and implementation of advanced VoIP (Voice over Internet Protocol) applications.eLoyalty's principal offerings include the Behavioral Analytics Service andIntegrated Contact Solutions.

eLoyalty uses the term "backlog" to reflect the estimated future amount ofManaged services revenue related to its Managed services contracts. Thevalue of these contracts is based on anticipated usage volumes over theanticipated term of the agreement. The anticipated term of the agreement isbased on the contractually agreed fixed term of the contract, plus agreedupon, nevertheless optional, extension periods. Anticipated volumes may be greateror less than anticipated. To boot, these contracts typically arecancellable without cause based on the customer making a substantial earlytermination payment or forfeiture of prepaid contract amounts. The reportedbacklog is expected to be recognized as follows: $19.6m in 2011; $27.0m in2012; $19.4m in 2013; $14.1m in 2014 and thereafter.