STRATEGIC PARTNERS
June 5, 2002
NEW YORK -- Shares of eFunds plunged on June 5, closing down 30 percent at $9.32, after the company lowered its earnings expectations for 2002 and also announced the unexpected departure of Chief Financial Officer Paul Bristow, who will retire later this month. (See related story eFunds lowers earning expectations)
WR Hambrecht analyst Stephen Law was one of several analysts who lowered ratings on eFunds, according to a report on TheStreet.com. He noted that the growth expected from eFunds' customer account and integrations business has not materialized. "They have yet to sell one of those products," he said.
In a conference call, eFunds CEO Gus Blanchard confirmed that two financial institutions had cancelled plans for those services that resulted in the loss of $15 million in anticipated revenues for the year.
A large retailer that was to have been the first customer for the company's Electronic Check product also has indefinitely postponed a decision on a purchase, Blanchard said during the conference call, resulting in the loss of another $11 million in expected business.
Analyst Law also mentioned political uncertainties in India, which have scotched plans for the expansion of eFunds' business in that country, resulting in the loss of $5 million in anticipated revenues.
In its original forecasts for 2002, Blanchard said eFunds anticipated $70 million in revenues from sales of existing products, another $40 million from sales of new products and $35 million from the acquisition of new ATM deployment and management business.
The company's revised estimates, Blanchard said, call for $15 million to $30 million in revenues from existing products, no new revenue from new products and $25 million from the ATM business.
The company has embarked on an aggressive cost-cutting campaign, Blanchard said, including the elimination of 300 jobs over the next two months and the cancellation of incentive bonuses. eFunds also has hired a consulting firm to conduct a six-week examination of each of its business lines, product development plans and expense streams.
"This will almost surely lead to future product consolidations and cancellations," Blanchard said during the conference call.
According to TheStreet.com report, some 34 percent of eFunds' revenues come from the electronic debit services it offers to financial institutions, retailers and e-commerce companies in the U.S., the UK and India. The company's identity verification and information technology and management consulting businesses each account for 26 percent in revenues. The remaining 14 percent comes from the ATM business.
