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Finextra50 suffers biggest one week fall

30 July 2007  |  2686 views  |  0 graph

The Finextra50 Financial Technology Index fell 5.68% last week to close at 98.05. It was dragged down by several firms such as Fiserv and Choicepoint reporting disappointing earnings, and a general downturn across most major global markets. However, Vasco Data Security and Advent Software bucked this trend to end the week significantly higher.

Major gainers
Advent Software finished the week strongly at $36.40, up 6.96%, after announcing that a record 15 new customers selected its investment accounting platform Geneva in the second quarter of 2007. The customers include several hedge funds, a fund administrator, and two asset managers located across the US and EMEA regions.

This drove revenue of $52.4 million in the second quarter, up 18% on the previous year.

Shares in digital security firm Vasco Data Security surged to a 52 week high last week after the vendor said its second quarter profit more than doubled on the back of strong demand for its Web authentication technology. It ended the week up 5.27% at $26.38.

The vendor's net income for the second quarter to 30 June 2007 climbed to $6.9 million, compared to $3.0 million in the year ago quarter. Net income for the first half of 2007 was $11.8 million, compared to $4.2 million for the comparable period in 2006.

Indian offshore outsourcing services firm 3i Infotech closed up 2.43% at Rs299.80 on Friday after recording a 83.6% rise in consolidated net profit for the June quarter at Rs 39.2 crore from Rs 21.35 crore reported in the corresponding quarter a year ago. Revenues almost doubled to Rs 264.17 crore from Rs 133.21 crore.

The company claims its revenues are somewhat protected from the rising rupee-dollar situatoin as only 25% of its revenues are in dollar terms. It adds that more than 45% of its revenues come from India and the Asia-pacific region.


Major losers
Eight companies in the index fell by more than 10% last week, led by ORC Software, which closed down 13.12% to Skr149. The company had been trading in the 180 to 200 range since the start of May until it announced its quarterly results on 13 June. Though it reported year on year quarterly growth in net profit of 33%, it said profits were impacted by foreign exchange fluctuations, and the share price has since been steadily dropping.

Indian lending and banking software vendor Nucleus Software fell 11.31% to Rs850.55 despite announcing a 33.96% increase in Q1 revenue. Its consolidated revenue for the quarter ending 30th June 2007 increased by 33.96% to Rs66.66 crore as compared to Rs49.76 crore for the corresponding quarter of the previous year. Net profit after tax increased by 4.54 % to Rs14.01 crore as compared to Rs13.40 crore for the corresponding quarter in the previous year.

The company is planning to pay a stock dividend, issuing one bonus share out of existing free reserves for every share held as of the August 6 record date. This is a common tactic in the Indian market to capitalise free reserves and send a positive signal about a company's position to the market. But the tactic doesn't always have a positive impact on ex-bonus share price (taking into account increased number of shares), and it remains to be seen whether this will help the company bounce back from last week's sharp fall.

Identification and credential verification services provider Choicepoint fell 10.98% last week after reporting a slight fall in quarterly income. It had net income of $32.6 million on $269.4 million in revenue, compared with net income of $34.9 million on $260.6 million in revenue in the second quarter of 2006. The company says the income reduction was partially due charges related to severance and lease abandonment.

Fiserv fell by 10.82% kast week to finish at $49.54 as its quarterly results failed to meet analyst estimates. The company posted net income of $108.2 million, or 64 cents a share, compared with $117.7 million, or 66 cents a share, a year ago. According to Reuters Estimates, analysts expected earnings of 71 cents a share, on revenue of $1.2 billion.

Fiserv also lowered its full-year profit guidance to reflect the sale of its investment support services operations in two separate deals, which will net it about $250 million. It now expects a profit of $2.74 to $2.82 per share, down from previous guidance of $2.86 to $2.94 per share.

Fidelity National Information Services fell 10.188% last week despite announcing its second quarter profits rose more than double as compared to the year-ago level. Its net income for the quarter was $148 million, or 75 cents per share, as compared to $66 million, or 34 cents per share, in the year-ago period. Total revenues increased to $1.2 billion, from $1.02 billion.

The company also saw its proposed $1.8 billion aquisition of eFunds clear an antitrust hurdle as the U.S. Federal Trade Commission gave the deal the go-ahead and terminated the review period early.

Separately, Findelity NIS reported in a regulatory filing that a former employee who stole consumer records from the cheque authorising company actually took 8.5 million records, more than 3 times the original estimate.

Other US fintech stocks falling more than the average for the US market include: Hypercom, which closed down 12% continuing a downward trend since its CEO resigned in mid July; ACI Worldwide, which fell 11.42% after ditching the Transaction Systems Architect name for the listed company and formally adopting the ACI Worldwide brand; and Broadridge Financial Solutions, which ended down 10.37%

Index comparison



Methodology
More information on the Finextra50 Financial Technology Index methodology and constituent stocks can be found here.

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