ACXM Acxiom Holdngs (delisted)

Acxiom Corporation (ACXM) is scheduled to announce its first quarter 2012 results before the financial markets open on Wednesday, July 27, 2011.

The company has consistently met or exceeded expectations. On average, Acxiom has beaten the Zacks Consensus Estimate by 11.09% in the last four quarters.     

Fourth-Quarter Recap

Acxiom Corp posted a net income (excluding one-time items) of $17.5 million or 21 cents per share compared with $15.6 million or 19 cents per share in the year-ago, beating the Zacks Consensus Estimate of 19 cents.

Including one-time items, net loss was $67.1 million or 83 cents per share compared with a net income of $16.6 million or 21 cents per share in the year-ago quarter. The loss was mainly due to an impairment charge of goodwill and intangible assets.

Revenues for the fourth quarter of fiscal 2011 came in at $298.8 million, up 3.6% year over year and in line with management’s expectation of $295 million to $299 million.

Agreement of Estimate Revisions  

In the absence of any significant news, none of the 5 analysts providing estimates changed their earnings estimates in the last 30 days.

Magnitude of Estimate Revisions 

In the last thirty days, the Zacks Consensus Estimate for 2012 was stable at 77 cents per share, representing a growth of 12.5%. Estimate for the first quarter of fiscal 2012 was also static at 13 cents per share, reflecting year-over year growth of 5%.

However, earnings estimates for fiscal 2012 have declined in the last ninety days due to the uncertainty in management and lawsuits initiated by the purchasers of common stock of Acxiom between October 27, 2010 and March 30, 2011.

Our Take   

We are concerned about the several lawsuits initiated against the company, alleging Acxiom of having violated the Exchange Act. The stock holders allege that the financial statements issued by the company were false and misleading, which artificially inflated the price of Acxiom’s securities.

Moreover, Acxiom’s international operations were on the decline and not operating as per plan. They also claimed that the impairment of international operations was not recorded properly and on time.

Additionally, the company’s CEO and President John A. Meyer and CFO Christopher W. Wolf resigned from their posts. As a consequence, we fear an increase in the rate of attrition of employees and adverse affect on the businesses, operating results, financial results and internal controls.

We prefer to wait for greater clarity given the uncertainty due to the change in management and the legal cases. Currently, we maintain a long-term Neutral recommendation on the stock. Acxiom has a Zacks #3 Rank, which translates into a short-term Hold rating (1-3 months).

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