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Acxiom announces third-quarter earnings Thursday, Jan 24, 2008 By Jason Wiest Arkansas News Bureau LITTLE ROCK - A $65 million termination fee Acxiom Corp. received after the cancellation of its $3 billion go-private deal bailed the company out of a fiscal third-quarter loss, Acxiom officials announced Wednesday. The payment inflated Acxiom's quarterly profit to $54.7 million, up 119 percent compared to earnings of $24.9 million in the third quarter a year ago. Revenues, however, which grew less than 1 percent in both previous quarters, shrank less than 1 percent this quarter compared to the third quarter last year, the company said. "Our revenue and earnings on continuing operations continue to be impacted by the difficulty in the financial services industry, which has resulted in reduced spending by many of our clients," interim company leader Charles Morgan said in a prepared statement prior to a conference call to discuss the quarterly earnings. Although Acxiom added two new credit card customers in the quarter, with one existing customer setting record-high volumes for mailings in an attempt to capitalize on decreased mailings by other companies, revenue from that type of business was down 7.5 percent in the quarter, Morgan said on the conference call. "They can cut back for a while but if they cut back dramatically for a long time they're going to give up a large center of profit," Morgan said, noting that Acxiom has weathered dry times in that sector of the business before that lasted up to 12 months. The current downturn has lasted about 4 months, he said. Acxiom had previously announced that it would cut expenses in an attempt to negotiate the downturn experienced by many of its clients. The company laid off 266 employees in September 2006. "Although these initiatives had a meaningful impact on expenses this quarter, these measures did not fully offset the reduction in revenue in the third quarter," Morgan said. "We expect to experience continued reduced spending from some of our clients, especially in the financial services industry." Other one-time charges for the quarter included a $2.6 million gain from the sale of a software distribution unit in France, $1.1 million in costs related to the failed buyout and restructuring activities in Europe, and a $3 million payment made to Morgan as part of his retirement package. Acxiom announced that it had repurchased approximately 4 million shares of its own stock for $49.1 million. ValueAct SmallCap Master Fund L.P. was given permission to purchase up to $30 million of stock. Acxiom said the fund is associated with, but not controlled by, ValueAct Capital Partners, which is Acxiom's largest shareholder and one of the private equity groups that went back on the $3 billion offer to take Acxiom private. Earlier this month, Acxiom announced John Meyer, the former Global Services president for Alcatel-Lucent, a large telecom equipment firm, would succeed Morgan on Feb. 4. Prior to the earnings announcement, shares of Acxiom (NasdaqGS: ACXM) closed Wednesday at $9.00, down 9 cents. Acxiom's stock price has fallen steadily since its proposed buyout by ValueAct and Silver Lake Partners that was announced in May 2006 began to go south and eventually was called off. Acxiom's stock price was $25.57 per share when the company's fiscal first quarter loss of $11.5 million was announced near the end of July 2006. Less than three months later, only weeks after Acxiom announced that the deal had been called off by the buyers and that Morgan would soon retire, Acxiom announced fiscal second-quarter earnings of $10.5 million, down from $21.7 million in the same quarter a year earlier. On the day of that announcement, Acxiom's stock price stood at $14.17 a share. Both Morgan and Meyer made positive comments during the conference call about the company's future. Morgan highlighted growing revenue streams from specific sectors of Acxiom's business. "I must caution you that these bright spots are not enough to fully offset the softness that we're experiencing with our large financial service clients," Morgan said. "We're likely going to see that softness continue at least through the fourth quarter." The company forecasts revenue for the fiscal year, which will end in three months, to be flat to down 1 percent compared to fiscal year 2007. |
