Acxiom: Right Strategies, People in Place in Europe

by Lance Turner  on Wednesday, Aug. 3, 2005 12:37 pm  

Despite falling short of "aggressive initial expectations" for its new European businesses, Acxiom Corp. executives told investors Wednesday that they are confident that the company's operations there will be back on track in the coming quarters.

During the Little Rock-based information management services company's annual meeting at its River Market office building, Chief Operations Leader Lee Hodges said Acxiom should have anticipated the complexities of merging with Claritas Europe and Consodata. The companies, with which Acxiom completed mergers last year, are two of the continent's largest data companies.

European expenses and revenue consolidation dragged on international profits, which in turn harmed Acxiom's first-quarter performance. On July 12, Acxiom surprised investors and employees when it said its first-quarter earnings would come in lower than expected. Citing difficulties in Europe, Acxiom said it would cut 4 percent of its global work force, or 250 employees, including about 100 in Arkansas. It said the move would save the company $14 million to $16 million per quarter, or about $60 million per year.

On Wednesday, Hodges repeated earlier commitments from Acxiom to cut expenses, with most actions focused on overhead and not service delivery components. He said the company is convinced it has the right strategies and management in place in Europe and that revenue increases there are achievable.

While investors who filled the company's large conference room on the Acxiom building's first floor heard company promises to cut expenses and improve profit, the day's other topic of interest - ValueAct Capital Partners buyout offer - went unmentioned during early remarks by Acxiom executives, including Company Leader Charles D. Morgan. Acxiom has previously said that the offer of $23 per share by the investors group, the company's largest shareholder, "is not in the best interests of the company and its shareholders."

For the 2005 fiscal year, Acxiom said revenue increased by 21 percent, income from operations grew by 31 percent, pretax income was up by 58 percent and net income increased by 19 percent.

'Strong Competitive Positions'

In opening remarks, Morgan said Acxiom is in one of the most "significant trends of transformation" in the company's history. He noted that company revenue has grown 41 percent over the last four years, and he said that Acxiom, with its businesses in Europe in China, has established "strong competitive positions" in geographic places where clients want them to be.

Again, Acxiom executives placed great focus on its Customer Information Infrastructure, a grid computing system that links hundreds of desktop computers together to act as one big server. Acxiom is banking on CII to offer clients complete systems to manage information.

For example, Acxiom in 2004 signed a deal with Information Resources Inc. of Chicago to provide data center operations and an information management platform to help IRI collect and analyze consumer information. Acxiom will use its CII grid system to run IRI's data operation out of Acxiom's Conway offices. The multiyear contract is expected to generate $300 million in revenue for the company, and Hodges told shareholders that Acxiom is pursuing other CII deals.

Acxiom is also looking to enter new markets with its Integrated Marketing Services Organization, built with its acquisition of Digital Impact Inc. of San Mateo, Calif., a marketing company that specializes in campaigns across multiple media channels including personalized e-mail, targeted Web sites, banner and other Web advertisements, and search engines.

Bill Park, the former Digital Impact chairman and CEO who is now leading the IMSO, told shareholders that marketing across the channels represents a $270 billion market. Acxiom wants to integrate its offline marketing efforts with IMSO's online efforts to enter that market. Acxiom wants to begin launching new projects from IMSO by fiscal 2007.

In other business Wednesday, Acxiom shareholders re-elected three company directors - William Dillard II, Harry C. Gamble and Thomas F. "Mack" McLarty III - and approved two proposals, an amended stock options plan and a stock repurchase plan for employees.

Shares of Acxiom (Nasdaq: ACXM) were trading at $20.09 on Wednesday after closing at $20.22 on Tuesday.



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