Acxiom Corporation
(
ACXM
) seems to be moving through a dynamic shift towards its core
competency segments as desired by the new management team. However,
a couple of existing downsides linger which make us reiterate our
Neutral recommendation on its stock presently.
A decision had been taken with regard to steering the company's
focus towards its core competency areas previously. It is
praiseworthy that Acxiom has already started implementing
strategies addressing the company's focus. Recently, the company
sold off its background screening unit, Acxiom Information Security
Services (AISS) as a nascent step towards meeting that
objective.
Acxiom posted an impressive outlook for its fourth quarter of
fiscal 2012. Even though critics may contend that this move is too
ambitious considering its low revenue yields in the third quarter
of fiscal 2012, the company appears quite determined to grapple
with such bottlenecks and emerge victorious against the clouded
global fiscal scenario. Major product innovation strategies along
with foreign market proliferation are perceived to be the growth
drivers in the coming quarters by Acxiom.
One aspect which remains laudatory with regard to Acxiom is its
constant endeavor to return optimum value to its shareholders. The
company has already repurchased 4 million shares at nearly $43
million till now in its fiscal year 2012. Judging by its trend of
serving its investors' purpose, we can expect similar moves on the
part of Acxiom to remain interminable with regard to returning
share holder value in the coming quarters as well.
A major reason for our concern remains the clouded fiscal
scenario prevalent in the world today. Acxiom remains quite
vulnerable to factors such as unfavorable foreign exchange
movements and inflationary pressures which can deteriorate its
gains even if it performs well as a company. Hence, aspects such as
cost margins, consumer prices etc. need to be dealt with
solicitously, judging by the currently ailing macro conditions.
The database marketing and services are the core competency
segments towards which businesses are currently being focused. It
is to be noted that this emphasis demands heavy investments which
can become quite an onus to the company's earnings and margins
which might turn out to be burdensome on consumer prices.
We recently observed quite a few management shifts at Acxiom.
The first of these changes was the appointment of Scott Howe as the
new CEO and President. Second, Warren Jenson was offered the
position of Executive Vice President of the company. Such
management churns can cloud the investors' minds, thus undermining
their confidence in the company's future performance with so many
changes in the top management.
The company faces ominous competition from players such as
Fair Issac Corp.
(
FICO
),
Camelot Information Systems Inc.
(
CIS
) and
Epam Systems Inc.
(
EPAM
). In the short-run we have a Zacks #4 Rank on the stock which
translates into a short-term rating of Sell.
ACXIOM CORP (
ACXM
): Free Stock Analysis Report
CAMELOT INF-ADS (
CIS
): Free Stock Analysis Report
EPAM SYSTEMS (
EPAM
): Free Stock Analysis Report
FAIR ISAAC INC (
FICO
): Free Stock Analysis Report
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