ACI Worldwide Q2 profit below Street, lowers '08 view

BANGALORE (Reuters) - ACI Worldwide Inc (ACIW.O) posted quarterly earnings below market estimates, cut its 2008 outlook citing extended sales cycle with banking customers, and announced key executive departures, sending its shares down 32 percent.

"The focus for ACI has been on cash flow and it was disappointing to see that they had negative cash flow," Wedbush Morgan Securities analyst Gil Luria said by phone.

The company, which provides software for electronic payment systems, reported a negative operating free cash flow of $10.9 million for the second quarter.

ACI Worldwide said Richard Launder, president, global sales, and Mark Vipond, president, global operations, are leaving the company to pursue other interests.

In February, the company said Chief Financial Officer Henry Lyons resigned.

"It's hitting a sore point that three of the top executives have left the company within a short period," Luria said.

The company said it plans to cut jobs, reallocate headcount to different geographies and consolidate non-core products and facilities to reduce costs.

It expects to incur a one-time cash expenditure of $15 million to $25 million related to the restructuring and sees cost savings of up to $30 million during 2008 and 2009.

It did not provide any specific detail on job cuts.

Shares of the company, which competes with S1 Corp (SONE.O) and Fundtech Ltd (FNDT.O), fell to a low of $14.26, but pared some losses to trade down $6 at $14.98 Tuesday afternoon on Nasdaq.

LOWERED OUTLOOK

For 2008, ACI Worldwide now expects to achieve 95 percent to 98 percent of its prior sales outlook, or a range of $430 million to $440 million, due to the extended sales cycle it is seeing with banking customers.

The company is currently in a 15-18 month closing cycle, compared with the previous 9-15 month cycle, a company executive said in a conference call.

Analysts were expecting 2008 revenue of $401.6 million.

ACI Worldwide also lowered its combined revenue plus 60-month backlog growth to between $190 million and $195 million in 2008.

In February, the company said it expected combined revenue and 60-month backlog growth to reach about $200 million in 2008.

Operating free cash flow is now expected to be between $45 million and $50 million, compared with $52.5 million in 2007.

For the second quarter, net income was $828,000, or 2 cents a share, compared with a net loss of $2.7 million, or 7 cents a share, a year earlier.

According to Reuters Estimates, the company earned 5 cents a share, excluding items, below analysts' average forecast of 11 cents.

Revenue rose 11 percent to $109.2 million, mainly due to rise in services fees. Analysts were expecting $99.1 million.

(Editing by Deepak Kannan)