TRM Corp.'s stock is in danger of being delisted.
The Portland, Ore., automated teller machine operator was notified Monday by Nasdaq that its shares were not in compliance with the exchange's minimum bid price requirement, having closed below $1 for the last 30 business days.
TRM, which deploys ATMs at merchant stores, has 180 calendar days, until March 10, 2008, to regain compliance. To do so its shares must remain at or above $1 for at least 10 consecutive business days during that 180-day period.
Richard Stern, TRM's president and chief executive, said in an interview Monday that he was not concerned about meeting Nasdaq's requirements.
"I'm not happy about it, but I'm not worried about it," said Mr. Stern, who was promoted from chief operating officer in June.
Though the warning might hurt TRM's stock price initially, he said, "I'm confident that we'll have enough news over the course of the next couple of months that we should make investors confident that we are a stock that's worth over a dollar."
At midday Tuesday, TRM's stock was trading at 90 cents, down 1.1% from Monday's closing price.
TRM has struggled for more than a year. It said in April 2006 that it was having problems meeting its debt obligations. It has faced delisting before, for failing to file its 2006 annual report on time.
In the past year TRM has pared back its business significantly, selling off its photocopier operations and its foreign ATM units to focus solely on its U.S. ATM business. It has paid off much of its debt and is now reporting its quarterly earnings statements in a timely manner.
Mr. Stern said the company continues to improve its cost structure, margins, and cash flow to be "much more reflective of what market costs are for operating an ATM company."
Mr. Stern said TRM is now considering acquisitions. He said during an earnings call in May that it would make deals that would not require "burdensome leverage. We've been down that road previously, and we will not return to that strategy."
Edward Neumann, the managing director of the banking practice for CC Pace in Fairfax, Va., said TRM's problems are endemic to the highly competitive, and declining, ATM industry.
"The market for off-premise ATMs is falling precipitously, and we believe that it will continue to decline in years to come," he said, because consumers are using debit cards more often at the point of sale and are using their own banks' ATMs more often to avoid surcharge fees.
Unlike banks, "which view ATMs as mostly a cost savings and an efficiency for customers, off-premise ATMs have to justify their costs on pure revenue," Mr. Neumann said.
However, Gwenn Bezard, a research director at Aite Group LLC in Boston, said that ATM companies can still thrive in a declining market.
"Companies are not at the mercy of market conditions, otherwise … managing companies would be pointless. You'd just have to go with the tide," Mr. Bezard said.
Branding agreements with banks have proven a successful strategy for ATM deployers, he noted, though TRM has had moderate success landing such deals because the bulk of the machines in its network are owned by merchants.
"If they want to strike a branding deal with banks, they have to go back and forth between the banks and each individual merchants," Mr. Bezard said of TRM. "It's probably a nightmare if you have to convince each merchant one by one, and it probably kills the business model."
