Carreker Corp., a vendor fighting for its corporate independence, reported a profit for its fiscal second quarter, which ended July 31, and its chief executive offered a "cautiously optimistic" outlook on new products.
Activist shareholders have pressed the Dallas image and payments system vendor to put itself up for sale. John D. "Denny" Carreker, its chairman and CEO, said last week that it continues to review its "strategic alternatives," but he would not discuss the direction or timing of a decision.
"As we make progress, we remain focused on delivering value to all of our stakeholders," he said.
Justin Cable, an analyst at B. Riley & Co. of Los Angeles, said that even though the results were encouraging, Carreker still could be a takeover candidate.
The company reported earnings of $961,000, or 4 cents a share, reversing a first-quarter loss of $34,000, or break-even on a per-share basis. Revenue rose 6%, to $28.8 million.
Carreker compares its results to those of a quarter earlier, rather than a year earlier. Its second-quarter earnings fell 8.8% from a year earlier, and revenue fell 3.7%.
Executives offered limited financial guidance, projecting that fiscal third-quarter revenue and earnings would be "roughly in line" with those of the second quarter, and that the full-year results would improve from the previous fiscal year.
Mr. Carreker used the conference call to emphasize the company's progress in positioning itself for the future.
"For the past several years we've been struggling with revenue declines from our legacy products," but new products coming to market showed the results of a "strategic growth initiative" that it began in 2004, he said.
Mr. Carreker cited recent announcements as evidence of the results. Last week Bank of the West, a San Francisco unit of BNP Paribas SA, said it would be the first user of Carreker's TrackPoint software for automated document tracking. Last month the vendor said one of the largest correspondent banking companies (which it did not name) has expanded its license to use software for archiving images and producing image replacement documents.
Additional products that Carreker is developing will help bankers compete in markets such as health care, insurance, brokerage, retailing, and casinos, he said.
He emphasized the opportunity provided by Carretek LLC, an offshore-processing joint venture with Mastek Ltd.'s Majesco Software Inc. Webb Edwards, a former president of Wells Fargo Services Co., was elected the venture's chairman last month.
Mr. Carreker said outsourcing and online business offerings, though still small, give his company a chance to extend its reach "not only into Tier 1 or Tier 2 banks, which has been the historical focus, but also for that to go downstream to Tier 3 and Tier 4" institutions that historically were too small to afford its products.
Mr. Cable wrote Friday in a note to clients that Carreker's fiscal second quarter was stronger than he expected, and that its second half and next fiscal year could determine the vendor's fate.
B. Riley & Co. is headed by Bryant R. Riley, one of three activist shareholders named to the Carreker board in the past year. Mr. Cable wrote that he has a "buy" rating on the stock, at least in part because powerful shareholders could yet compel the company to sell out.
He called Carreker "a compelling acquisition candidate due to its technology and broad client base."
