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Finextra50 ends 2007 down 4.65% since benchmark

02 January 2008  |  3608 views  |  0 Hourly Markets

The Finextra50 Financial Technology Index held steady over the final two weeks of December, finishing the year at 95.35 despite big falls for ACI Worldwide and Gresham Computing.

End of December gainers and losers

Online Resources saw the index's strongest finish to the year, rising 14.95% since December 17 at $11.92 amid signs that the management turnaround is on track. Narrowing Q1 and 2008 loss projections announced in December were in line with previous guidance.

Vasco Data Security rose 10.31% in the last two weeks of the year, finishing at $27.92. India's Mphasis, majority owned by EDS, also finished the year with a flourish, rising 9.84% to Rs307.00.

In Europe, Orc Software was the biggest gainer, rising 8.7% to 162.50 after announcing plans to launch an algorithmic trading engine with pre-packaged strategies to target trading firms who might not otherwise have the IT or quant skills in-house to benefit from algorithmic trading.

ACI Worldwide dropped 19.01% in the last two weeks of the year, ending at $19.04 after receiving yet another non-compliance notice from Nasdaq for failing to meet a financial reporting deadline. The company claimed it couldn't close out the year and file its annual report on time because it has been playing compliance catch-up, filing four regulatory reports in the preceding four and half months.

The company traded as low as $16.51 after this announcement, but was bouyed by the subsequent news that IBM has acquired 2.85 million shares, or a 7.41% equity stake, in the company.

Gresham Computing fell 15.91% in late December, ending at 55.50p. Shares in the company have lost more than 50% of their value since the start of November, during which time commercial director Steve Purchase resigned.

Purchase had been with Gresham for more than 30 years and was a significant shareholder in the company, although in recent years he had been diluting his stake. According to the last Director Dealings regulatory filing regarding Purchase, in December 2006 he held 3.6 million shares in the company, which amounted to 7.54% of the company at the time. Gresham gave no reason for Purchase's decision to resign.

Other companies to end the year on a not-so-festive note include Factset Research Systems, which fell 14.50% to $55.70 despite announcing fiscal first quarter earnings growth of 24%, in line with expectations.

Diebold also dropped at the end of the year after announcing bad news just before Christmas. It fell 9.61% to $28.98, after news that it is under investigation by the U.S. Department of Justice for its revenue recognition practices, in parallel with an existing probe by the Securities and Exchange Commission.

Major gainers and losers for 2007
The top 10 gainers in 2007 since the index inception in May were all US listed companies, covering a range of subsectors including software, outsourcing and processing, and information vendors.
Gainers
Advent Software 57.08%
Morningstar 57.08%
Vasco Data Security 30.47%
Actuate 24.32%
Pegasystems 18.82%
Interactive Data 10.62%
S1 10.61%
Broadridge 7.94%
SEI Investments 5.93%
Fiserv 5.77%

Losers
The biggest fallers for 2007 were a mixed bag in terms of geography, but it's interesting to note that they are predominantly banking and capital markets software vendors, with the exception of Diebold.
Gresham -57.39%
ACI Worldwide -40.67%
Diebold -39.71%
Linedata Services -38.24%
Chordiant Software -37.45%
i-flex -36.11%
Nucleus Software -27.54%
Misys -26.90%
GL Trade -26.16%
Polaris -25.96%


Index comparison
It's been a roller-coaster 8 months for the Finextra50 index, with the knock-on effect of the US sub-prime mortgage crisis clearly impacting markets worldwide. As a result the index has been in negative territory for much of the year, dragged down by poor financial performance in the banking sector, which is the customer base for our index constituents. This is clear from the comparison of the Finextra50 performance and that of the S&P Global Financial Sector Index below.



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

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