To listen to a replay of the conf call: 1-800-633-8284, reserv#3300656.
Talked about the bank sale: FBR is representing them and has contacted 50 institutions to date with a "positive response" from 18 so far. The bank's book value (essentially the minimum capital that the OTS required to be allocated) is $10mm, so make your guesses about the sale price based on that if you wish. In response to a question, Chip acknowledged that 1-3 times book is feasible. In any case, this sale will free up at least $10mm of cash (out of the $28mm on the books).
As for SBD, this is a 3 yr old company that was on track to produce $6.5-7mm of revenue this year. However, many/most of the contracts producing this revenue have been or will be shut down to free up the people for S1 customer implementations (some were already working for S1 on a subcontractor basis, so bringing them in house is likely to save a few bucks).
The options granted in the SBD purchase will go 1/3 to the 3 principals and 2/3 to the employees. The options are an incentive, tied to hitting certain "bogeys" including delivery of VIM and VFM 5.0, and achieving profitability. VIM (i for investment) will begin testing early 2nd qtr, release expected end of qtr.
Cash burn was approx $5mm in the quarter and is not expected to rise materially in the next few, so they have cash for perhaps 6 more quarters if they get no premium for the bank, longer if they do. Breakeven depends primarily on the rate at which the data center's bank customers can get customers signed up for online service. They expect no significant growth in SG&A expenses for a while, so it looks like a dollar of revenue flows through pretty well to the bottom line from here.
17 (check the number when you listen) banks will be live in the next 60 days. Wachovia and another nameless $60bn bank live w/in 30 days. Huntington signing 1000 new online accts per week. Republic Bank in Florida ($1.5bn assets) has 7.5% of their customers online capable now (as many old folks as 20-somethings the bank says).
Also talked a little tech stuff, 3 tier, fat server S1 solutions vs. 2 tier, thin server Integrion. Neither Chip nor Stockwell are techies (nor I), so this was brief, but Chip did comment that financial institutions seems to be moving more toward fat server and VFM is still the only working fat server solution on the market.
Note: this is my second hand account only, so listen to the call.
Bob |
