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The online banking and bill payment provider Online Resources Corp. said Friday that its board is "evaluating unsolicited expressions of interest in potential business combinations."
January 21
Online Resources Corp.'s shares fell more than 30% Wednesday morning after the banking technology vendor announced it turned its back on an unsolicited acquisition bid and reported a disappointing first-quarter earnings forecast.
The Chantilly, Va., company, which sells bill payment, e-commerce and other software to banks, said Tuesday that it launched a new long-term strategy that involves consolidating its various product platforms in lieu of entertaining a sale. Online Resources in January announced it received unsolicited "expressions of interest" in doing a potential deal with an unnamed suitor.
"The Board of Directors determined that the completion of a transaction on acceptable terms was unlikely at this time and that the best course of action to achieve the highest shareholder value is to continue to aggressively pursue our long-term strategic growth plan," Joseph Cowan, the company's president and chief executive, said in a press release.
Online Resources reported fourth-quarter sales of $37.8 million, down 1.2% from a year earlier partly due to lower renewals of bill pay software clients.
The company reported a net loss attributable to common stockholders of $2 million, or 6 cents per diluted share, compared with a net loss of $1.1 million, or 4 cents per diluted share, a year earlier.
Analyst reaction to the results was mixed.
Thomas McCrohan, an analyst with Janney Montgomery Scott, downgraded the company's shares to "neutral" from "buy," citing a weak forecast and an "uninspiring" outlook for the full year as well as its decision to move forward as a standalone company.
"We believe the recent run-up in the stock price was more predicated on investors' expectations of a possible take out, and with that off of the table, we are stepping to the sidelines," McCrohan wrote in a research note on Wednesday.
Online Resources said it expects revenue in the first quarter of $38.2 million and $38.7 million and a net loss of 1 cent to 2 cents per share.
John Kraft, an analyst with D.A. Davidson & Co., wrote in a research note published Wednesday that the guidance was "well below" his expectations. However, Kraft reiterated his "buy" rating of the company, which he wrote is "in the early stages of a turnaround" that he predicts will result in a sale.
Online Resources' shares were down 31.4% at $4.15 on Wednesday morning.