LITTLE ROCK — Acxiom Corp.'s financial performance for the quarter ending Sept. 30 reflected the turmoil of a doomed attempt to be sold, the company said Wednesday.
Earnings were half of what they were a year earlier and chief executive Charles Morgan conceded in a conference call with analysts that "thousands of hours of meetings and analysis certainly did nothing to help results in the first half of our fiscal year." "But it has given us an informational foundation to help develop plans that we expect will in fact improve future results. I think it's safe to say that first half results show the effects of too much transaction and too little business focus. We've been operating in an atmosphere of great uncertainty throughout the entire organization. That period of uncertainty has ended."
Steven Davidoff, an assistant law professor at Wayne State University in Detroit, said it should be expected that the collapse of the buyout would contribute to a "significant and material decline in the company's revenues and earnings."
"Any acquisition involves distractions in management's time and money," said Davidoff, who specializes in mergers and acquisitions. "An acquisition isa major life event. It distracts management initially, and when the deal goes sour, that also takes away time. They are in a rebuilding mode and need to reestablish credibility with the market and credibility with themselves."
Three weeks after a sale to private investors failed, Little Rock-based Acxiom reported net income of $10.5 million in the quarter, down 51 percentfrom profit of $21.7 million in the second quarter last year. Acxiom earned 13 cents per share, beating the 12 cents a share projected by two analysts surveyed by Thomson Financial.
Acxiom's revenue was $351 million, up slightly from $348 million in the same period last year.
"We know we have revenue issues, particularly in our financial services business, that are still a work in progress," Morgan said. "And we're also very focused on expense management. We have work to do, but we have a lot of reasons for optimism." Acxiom was founded in 1969.
The company's stock performance Wednesday gave no immediate cause for optimism, however. It rose 5.6 percent to $14.17 in heavy trading on the Nasdaq exchange. Earningswere released after the market closed, and in after-hours trading, when investors had a chance to see the earnings report, Acxiom lost 62 cents of its 75-cent gain within two and one-half hours.
The stock has nose-dived since the announcement on Oct. 1 after trading that the $3 billion buyout by ValueAct Capital Partners and Silver Lake Partners fell through. The stock had reached $17.20 earlier on Oct. 1.
The stock hit a 52-week high at $28.25 on May 31, two weeks after the deal was announced. It hasn't been as low as its current trading level since 2003.
Acxiom received $65 million from its private equity pursuers on Oct. 10 because of the failed deal. The payment will figure in earnings for the third fiscal quarter.
Morgan will remain as chairman of the company and has said he will resign as chief executive. In answer to a question from an analyst, Morgansaid only that Acxiom's search to find a new chief executive officer is focusing on someone to come with a clean slate and make decisions about what is best for the future.
The board has established specifications for the new chief executive, Morgan said.
"The board is looking for the person to maximize the return on the asset base of the company," he said.
Acxiom would like to hire the person as soon as possible, Morgan said.
"If we find the right person in 60 days, then that will be 60 days," Morgan said. "But if it takes four months, it just takes four months. But there is a sense of urgency."
Chris Wolf, chief financial officer, said Acxiom will not provide financial expectations for the company beyond the current fiscal year.
He said revenues for this fiscal year will be flat compared with last year.
Business, Pages 29, 34 on 10/25/2007