Magazine article American Banker

S1 Expecting Profitable Year after 4Q Rebound

Magazine article American Banker

S1 Expecting Profitable Year after 4Q Rebound

Article excerpt

Coming off a losing year despite a good fourth quarter, S1 Corp. expects to complete its new online banking platform in the months ahead and turn a profit for 2004.

Chief executive Jaime Ellertson described 2003 as "a transition year" for the online-banking software vendor and said the transition will continue through this year.

Though it reported a profitable fourth quarter Thursday, S1 also said it had started the year in the red and that it may not be on comfortable financial footing until the expected summer release of an integrated Enterprise software suite.

It said fourth-quarter net income was $3.4 million, or 5 cents a share. For the third quarter it posted a net loss of $4.4 million, or 6 cents per share. For the year it reported a loss of $35.7 million, or 52 cents per share, more than double its 2002 net loss of $16.4 million, or 24 cents per share.

The Atlanta company has severed all ties with Zurich Insurance Co., which was its second-largest customer until Zurich withdrew from Internet banking in March 2003.

"We will begin the year in a loss position, and we will move to profitability as our revenue grows," chief financial officer Matthew Hale said during an earnings conference call Thursday. In a phone interview the next day he said, "It will take us a quarter or two to make up the $9.7 million of loss from the Zurich contract."

S1 projects a first-quarter loss of 3 to 5 cents but expects to end the year with a per-share profit of 3 to 8 cents.

John Kraft, an analyst with D.A. Davidson & Co., said that the optimistic tone of S1's fourth-quarter report was justified, to a point.

"These guys are getting into a habit of delivering results better than expectations," he said. "The issue now with these guys is how successful they will be with this new product strategy. …

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