Acxiom's Stock Plummets
Shares of Acxiom fell $9.38, or 44.91 percent, to $11.50 per share.
On Friday, Acxiom said that it anticipated revenue and earnings for the fourth quarter of fiscal 2001 -- which ended March 31-- will be below the company's previously stated expectations. Little Rock, AK-based Acxiom said it will hold a conference call next week to further discuss this information. Detailed financial information will be issued in a news release on May 15 as regularly scheduled.
"While fundamentally strong, Acxiom has not been immune to the severe economic downturn in the United States," said Acxiom company leader Charles D. Morgan. "Our customer base represents some of the finest and most respected companies in the world, but they are aggressively cutting expenses based on the current economic climate. In a quarter when we normally expect more purchases and projects to be completed as companies launch their new fiscal years, we have recently seen many of our clients postponing these large purchases and major projects. As a result, many new sales opportunities were delayed as late as the last week of the quarter."
Acxiom expects that fourth-quarter revenues will be in the range of $250 million to $260 million, delivering earnings of $.10 to $.12 per share, compared to the consensus that analysts' estimates of $.36 per share.
Axciom attributed the downturn to several factors including a weak economic climate for technology and dot-com companies, and a higher a write-off of up to $35 million related to the Montgomery Ward bankruptcy proceedings. Originally, the write-off was $30 million.
Acxiom, however, reported continued strong sales of AbiliTec, its customer data integration software. Fourth-quarter AbiliTec sales are expected to exceed $30 million, bringing the fiscal year total to more than $100 million.
"Not only did we have another great quarter for our CDI software," Morgan said. "But the AbiliTec pipeline continues to increase. We remain convinced of the long-term success of AbiliTec, and we hope to soon close many of the AbiliTec sales that were pushed into the future."
The company also said that it began an aggressive, broad-based cost-savings initiative in the fourth quarter that targets many major areas of expense, including advertising, payroll, travel and capital expenditures. In fiscal 2002, these initiatives are expected to produce $20 million to $30 million in expense reductions from current levels.
Acxiom said that no workforce reductions are currently planned.
"Acxiom is taking these strong steps to contain costs in every area of our business with an important goal: to do everything in our power to diminish the possibility of a workforce reduction," Morgan said.
Acxiom also announced that it expects its cash flow for the fourth quarter will be improved over that reported in the third quarter and that its total debt as of March 31 is expected to be lower than that reported for December 31, 2000. While a complete cash flow statement is not yet available, borrowing from the company's line of credit was reduced by $25 million during the quarter, reflecting improved free cash flow.
The company said that due to the business environment, it is making changes in AbiliTec contract terms. In the future, AbiliTec revenue recognition will more closely match cash flow and revenue will be recognized on a subscription model or as fees are due.