Integration troubles and senior-level management changes led to a worse-than-expected fourth quarter for S1 Corp., the Atlanta company said Thursday.

The Internet banking software provider told investors during a conference call that it would likely report a fourth-quarter net loss of between $318 million and $371 million, or $5.64 and $6.58 per share, on revenues of between $60 million and $60.5 million.

S1 is expected to report its fourth-quarter earnings on Feb. 13.

Craig A. Peckham, an analyst at Jefferies & Co., said he had expected a much lighter loss of only $2.38 per share and revenues of $70 million.

Glenn Greene, an analyst at ABN Amro, had expected revenues of $66.7 million.

At midday Thursday, S1's stock was down 11.29% to $6.91 a share.

Jaime Ellertson, who became S1's chief executive officer on Nov. 27, said the poor performance was the result of streamlining products and operations from the company's many acquisitions in recent years, as well as expenses incurred by organizing a new management team.

S1 discontinued an Internet banking product it had acquired through its purchase of Edify Corp. in November 1999, so it could create a single software application for banks of all sizes, Mr. Ellertson said. That delayed customer implementations and resulted in losses of $4 million to $6 million in the fourth quarter, he said.

"Most customers that were undergoing implementation wound up freezing that for a couple of months," as they decided to wait for the new product offering due out this year, Mr. Ellertson said. "They want to make sure before they continue implementation what their migration path is with S1."

He said he expects that the majority of those customers to stay with S1, and that the company will make up some of the lost revenues in the first quarter.

S1 also took a hit from the sale of its Vertical One Corp. subsidiary to Inc., a deal that closed on Wednesday. S1 took charges related to the sale.

S1 will get about a 32% ownership interest in Yodlee and be able to package Vertical One's aggregation tool into its own product offering.

Mr. Ellertson said his own hiring incurred costs and so will his search for a chief financial officer, a senior vice president of marketing, and other positions.

Mr. Peckham said the new CEO "is taking some aggressive steps here to clear the decks, frontload some of the expenses related to the restructuring, and set the company up for a cleaner 2001.

"I'm not shocked at the expenses they took last quarter," he said. "This is a sensible set of moves to position the company for a profitable 2001. It gives them a more cohesive set of products and helps differentiate their product in the marketplace."

Mr. Peckham predicted that S1 would be profitable by the fourth quarter, as the company previously estimated.

"Clearly some changes were necessary, but you still need to win new business before you get some comfort from a profitability standpoint," Mr. Greene said. "I think that restructuring and management changes were the right thing. Now it's a matter of executing and winning new business."

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