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UPDATE 3-Online Resources sees weak Q1; says not up for sale
March 15, 2011 / 9:36 PM / 7 years ago

UPDATE 3-Online Resources sees weak Q1; says not up for sale

* Q4 core shr $0.03 vs est $0.04

* Q4 Rev down 1 pct

* Sees Q1 core shr loss $0.01-$0.02

* Sees job cuts in US ops to facilitate transition to India

* Shrs plummet over 23 pct in after-market trading (Adds conference call details, analyst quote, CEO comments, share movement)

By Brenton Cordeiro

BANGALORE, March 15 (Reuters) - - Financial technology provider Online Resources Corp forecast first-quarter outlook below analysts’ estimates, and said it was no longer looking to sell itself, wiping out nearly a quarter of its market value in after-hours trade.

“The board determined that the completion of a transaction on acceptable terms was unlikely at this time,” CEO Joseph Cowan said.

In January, Chantilly, Virginia-based Online Resources said it was evaluating unsolicited merger offers, but had not identified the parties that had approached them.

Online Resources’ shares fell over 23 percent in after-market trading touching a low of $4.63. They closed at $6.05 on Tuesday on Nasdaq.

“Clearly the offers were below what the board considered reasonable,” analyst John Kraft of DA Davidson said.

Online Resources, which had been considered an acquisition target of late, had seen its stock surge almost 50 percent over the past 6 months.

The company also forecast flat revenue growth for 2011 and said it plans to set up a development center in India that will lead to job cuts in the U.S.

He declined to specify the number of job cuts, but said the company targeted lowering IT headcount costs by 35 percent by the end of 2013.

“We’re going to transition a lot of our headcount into India,” Cowan told Reuters. “It will take about 18 months to get up to full force that we want there.”

Cowan, who had introduced a long-term strategic growth plan after he took over as the company’s top executive last June, also said there “may be additional (management) changes as we go into the future”.

The plan includes enhancing its management team and investing in technology, products and organizational structure of the company, with a market value of under $200 million,

“The core of the company is really payments, and we’ve kind of gotten off-direction from that. We will be refocusing on that,” Cowan said on a post-earnings call.

Online Resources provides services to financial institutions, which enable those companies to offer services such as electronic bill payments and fund transfers.

For the first quarter, the company expects core net loss at between 1-2 cents a share. Analysts were expecting the company to earn 6 cents.

For the fourth quarter, core net income was 3 cents a share, compared with Wall Street estimates of 4 cents a share. (Reporting by Brenton Cordeiro in Bangalore; Editing by Prem Udayabhanu and Anil D‘Silva)

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