Online Resources Corp. remains an appealing acquisition target despite posting a first-quarter loss and being ordered to pay its founder and former chief executive $5.3 million, analysts said.
On Tuesday, Online Resources reported a loss of $7.2 million to common shareholders, compared with a $157,000 loss a year earlier.
The latest loss included the legal judgment and other costs associated with the case. Revenue rose 1.8%, to $39.3 million.
Though the company benefited from increased transaction levels in its e-commerce and banking services units and is appealing the court's verdict, it has set aside $7.7 million for legal fees, compensatory damages and estimated prejudgment interest.
On May 3, a Virginia circuit court awarded Matthew Lawlor, who founded Online Resources in 1989 and left after losing a proxy battle in 2009, $5.3 million, citing wrongful termination and breach of a stock plan and severance agreements. Lawlor had sought nearly $15.9 million in damages.
The Chantilly, Va., company also reported a nonrecurring charge of $900,000 in restructuring costs related to a strategic evaluation by its board.
John Kraft, an analyst with the institutional equity research firm D.A. Davidson & Co. of Lake Oswego, Ore., wrote in a research note May 11 that "we continue to believe" Online Resources "is in the beginning stages of a turnaround that will eventually culminate in a sale."
In 2010 Online Resources received several unsolicited bids from potential buyers.
The investment research firm Janney Capital Markets, a unit of Janney Montgomery Scott LLC in Philadelphia, also said it thought Online Resources was a takeover target, and it had a more muted reaction to the first-quarter results.
Online Resources' president and chief executive, Joseph L. Cowan, said during a conference call with analysts, "I am encouraged by the transaction trends we're seeing, particularly the year-over-year comparison in our biller business."
Biller-paid transactions increased 33%, to 20.5 million, in the e-commerce unit from a year earlier, while bill-payment transactions in the banking services unit increased 6%, to 11.6 million.
"This uptick is a reflection of the performance of our sales team over the past few quarters," Cowan said.
