Despite double-digit gains from i-flex and Computershare, the Finextra50 Financial Technology Index fell .48% last week. Weaker than expected earnings and guidance statements from Chordiant and SimCorp meant these firms led the fallers.
Major gainers
i-flex was the index's biggest gainer last week, finishing up 12.11% to Rs1435.00, bucking a downward trend in the Indian share market. A weakening rupee and influential foreign investors in Indian markets selling more than buying drove the Bombay and National stock exchanges down, but the changing trend in the currency is beneficial for Indian IT firms, including i-flex. After losing 45% of its value since the end of June, there is a view that the share may have reached bottom and many investors are buying back in on speculation that Oracle might make another bid for total control of the company, with the one year anniversary of its last bid of Rs2100 per share comping up in early December and the Oracle World event being held last week in San Francisco.
Computershare rose a further 10.52% last week to close at AUD$10.40 on positive trading momentum after it upgraded its earnings outlook at the end of the previous week. It now expects 30% EPS growth for fiscal 2008 rather than the 20% it forecast back in August. After recent share price rises the company was forced to tell the Australian Securities Exchange it was unaware of any potential takeover bids, although it admitted that rumours were circulating.
Private equity firm General Atlantic, which owns around 5% of the firm, is often reported as a potential suitor for the company. But it is more likely that Computershare will take advantage of the weakened US dollar to continue its own acquisition strategy. It made seven acquisitions totaling about USD$100 million in FY 2007 and four already this fiscal year totaling USD$70 million.
Vasco Data Security continued its bounce-back, rising 8.3% to finish at $21.27. Other companies to post significant increases include Fair Isaac, which was up 6.23% to $39.92, and Actuate, up 5.5% to $7.86. also bouncing back after a recent dip.
Major losers
Customer experience software firm Chordiant Software lost 22.12% of its value last week to close at $9.26. Despite posting a profit of 18 cents per share for the last quarter, roughly in line with analyst expectations, the company's revised guidance for the full year was reported by analysts to be conservative, and there are concerns about the effect of a deal backlog. But on a more positive note, one analyst noted that the company expects to close a big deal with Citibank in early 2008.
SimCorp also fell last week on reaction to quarterly earnings, dropping 12.83% to Dkr1074.00. The investment management software firm reported Q3 revenues were up 21% year-on-year to EUR34.5 million. But it maintained its full-year projections of revenue in the EUR150-160 million range with an EBIT margin of around 24%.
Other companies to see significant falls last week include Gresham (down 12.62% to 93.50p); ORC Software (down 11.41% to Skr141.75); and Fidessa (down 10.54% to 997.50p).
Index comparison
Methodology
More information on the Finextra50 Financial Technology Index methodology and constituent stocks can be found here.