by Steve BillsThe imaging-software vendor Carreker Corp. said Monday it would put, itself up for sale, after coming under pressure from an activist, shareholder., The Dallas company announced that it has retained Bear, Stearns & Co., Inc. as financial adviser to explore options aimed at enhancing shareholder, Our board of directors and management are strongly committed to, acting in the best interests of our customers, employees, Carreker, the company's chairman and chief executive, said, a press release., The news came on the heels of a Friday annoucement that Chapman Capital, a Los Angeles hedge fund, was urging Carreker to sell itself. In a, press, release, decidedly derelict, Chapman Capital estimated that Carreker could bring more than $12 a share, in a private sale. Carreker, which sells a large suite of payments software, and consulting services, closed at $6.39 Monday, down 1.69%., Chapman Capital said Friday in a filing with the Securities and Exchange, Commission that since June 1 it has acquired 1.4 million shares, or more, than, 5% of Carreker's stock., Robert L. Chapman Jr., the hedge fund's managing member, said Monday that, I told Denny Carreker that, there were two ways to stop Chapman Capital's aggression -- to hire an, It looks like, In an interview Friday, they are, of his efforts to drive Carreker's value higher by, forcing, I think, given Carreker's market share and customer base, there, will, Carreker has customers ranging from community and regional banks to the, industry's giants, including more than 75 of the nation's largest 100, banks., In the past two years it has announced software licensing deals with, Wachovia, Corp., Wells Fargo & Co., SunTrust Banks Inc., BB&T Corp., and Regions, Financial Corp., among others., But its sales have been weak and its stock has languished. Last week, Carreker reported a net loss of $34, 000 for its fiscal first quarter, which, ended April 30. In the quarter before that it had income of $1.5 million, and in the year-earlier quarter it had income of $498,000., Its stock has hovered between $4 and $8 since the start of *2005-, well, down from its all-time high of close to $40 in early 2001., In a letter dated June 7 to Mr. Carreker, Mr. Chapman said the vendor, first caught his eye in July *2005-, when another institutional investor, Prescott Group Capital Management LLC of Tulsa, complained that the shares, were undervalued., Phil Frohlich, the principal of Prescott Group, would not comment Monday, on Chapman Capital's letter. He noted that Prescott Group president Jeffrey, D. Watkins had been named to Carreker's board in March., to generate shareholder value, Mr., Frohlich said. According to a Carreker proxy statement filed last month, May 19 Prescott Group held 1.8 million shares, or 7.2% of the total shares, outstanding., Carreker admits it has underperformed its peers. In the proxy it, acknowledged that the total return on its stock has fallen during the past, five years, to less than 22% of its 2001 benchmark., In contrast, the total return for a self-defined group of banking, technology peers -- which Carreker identified as Bottomline Technologies, Inc., Corillian Corp., eFunds Corp., Fundtech Ltd., Jack Henry & Associates, Inc., Open Solutions Inc., Pegasystems Inc., S1 Corp., and Transaction, Systems Architects Inc. -- climbed to 118% of the 2001 benchmark. The, Standard & Poor's 600 Small-Cap Index climbed to 173 over the same period., (Carreker is a component of the S&P Small Cap 600.), S1 is also under pressure to sell. The Atlanta vendor of Internet banking, software and products for other banking channels agreed last month to, explore, a sale and to add to its board a representative of the New York investment, management firm Ramius Capital Group LLC, which has acquired almost 10% of, S1's shares., Christine Barry, a research director at Aite Group LLC in Boston, said, Carreker is one of the few remaining independent imaging vendors. Several, other imaging providers have sold themselves in recent years., They are being acquired by more of these bigger companies, like, Metavante, that have a broader range of products in the market, Ms. Barry, said., Metavante Corp., the technology subsidiary of the Milwaukee banking, company Marshall & Ilsley Corp., bought two check-image vendors in 2004:, Advanced Financial Solutions Inc. of Oklahoma City, which primarily serves, smaller banks, and VectorSGI of Addison, Tex., a maker of big-bank imaging, systems., Ms. Barry said Carreker's assets might fetch a good price in an auction., On a stand-alone basis they are suffering. As part of a broader portfolio, A lot of the core banking companies are, trying to get into every area and provide everything that a bank would
Published in American Banker (2006)
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