Bottomline Technologies' stock tumbled 34% Wednesday after the company issued a profit warning, citing an expected slowdown in sales as potential customers hold back on technology purchases during the months leading up to the year-2000 computer conversion.
The Portsmouth, N.H.-based company sells electronic payment software to banks and corporations and is considered one of many that would benefit from expected growth in the business-to-business electronic commerce market, predicted by Forrester Research Inc. to reach $1.3 trillion in 2002.
First, though, Bottomline Technologies must overcome weakened demand for its software in the near term.
"Financial institutions and large corporate entities are being very cautious at this time about adding new applications that interact with mission-critical payment operations," said Dan McGurl, president and chief executive, in a statement. The company could not be reached for additional comment.
Bottomline said it expects revenues for its fiscal first quarter, which ends Thursday, to be $8.2 million to $8.5 million. Wall Street analysts had expected $10.4 million.
The net loss will be 10 cents per share, the company said. A survey of four analysts published by First Call had expected net income of eight cents. Bottomline's stock closed at $16 a share Friday, down 38% from last week and 84% from its high of $98, reached March 16.
"The fact that they could forecast so far off from actual results is kind of shocking to me," said Heather Bellini, an analyst at Salomon Smith Barney.
Analysts say Bottomline is one of many bank technology companies bitten by the year-2000 bug. "The Y2K stories have been getting worse," Ms. Bellini said.
Roughly 75% of the bank technology vendor stocks tracked by American Banker have fallen during the past three months. Meanwhile, the technology-heavy Nasdaq index is up 7% from three months ago, to 2,740.4.
"Investors that I talk to are sort of cautious on some of these companies," said Charles Wittmann, analyst at First Union Capital Markets, referring to firms engaged in electronic commerce.
"They want to know the exact impact of Y2K on revenues in the latter half of the year,'' he said, "and until companies say they are through it, investors will not be quick to step up and buy."
Transaction Systems Architect's stock closed Friday at $25.5625, down 30% from its June 25 price. Sterling Commerce is down 46% from that date, to $19.0625; Bisys Group is down 21%, to $46.75: Equifax Inc. is down 22%, to $27.375; and NCR Corp. is down 36%, to $30.125.
Notable exceptions to the three-month downward trend are Checkfree Holdings Corp., up 48%, to $39.1875; and Verisign Inc., up 49%, to $102.125.
In other news, Dayton, Ohio-based NCR said it has licensed core bank data-processing software from Sanchez Computer Associates Inc. Terms were not disclosed.
The company would expand its outsourcing business by using Sanchez' client/server software, called Profile. "We want to give some variation and opportunity to the outsourcing market," said Jerry P. Klinger, vice president at NCR. For the last 20 years, NCR has used proprietary software to provide core data processing services to 350 community banks.
"We think that Sanchez has a proven high-level product set that we can leverage in our user base," Mr. Klinger said.
Sanchez' stock closed Friday at $31.50, down 15% for the week and 40% from its 52-week high of $52.75, set July 16.