Bloomberg News

TNS Inc. Reports Fourth-Quarter Loss After Sales Slow

February 26, 2007

Transaction Network Services Inc. (TNS:US), a service provider that links debit and credit-card transactions with payment processors, reported a fourth-quarter loss after fewer U.S. companies used its network.

The net loss was $6.66 million, or 28 cents a share, compared with a profit of $1.43 million, or 6 cents, a year earlier, the company said in a statement. Excluding some items, profit was 11 cents, missing the 20-cent estimate of analysts surveyed by Bloomberg. Sales rose 13 percent to $74.4 million.

TNS is counting on overseas revenue to offset slowing sales in North America, where customers are developing internal payment-processing networks rather than using outside companies. Sales at the Reston, Virginia-based company's international- services business, its largest unit, rose 23 percent to $29.3 million in the fourth quarter, TNS said in the statement.

``The last year or so, it's been a bit of a turmoil for the company,'' Chris Penny, an analyst with Friedman Billings Ramsey Group in Arlington, Virginia, said before the results were released. He rates the shares ``outperform'' and doesn't own any. ``They need to show some stability in their revenue and prove to investors that they can start hitting their guidance numbers.''

Acquisition Target

TNS has rejected buyout offers over the past year, saying they undervalued the company. The last attempt, in January, was for $16 a share.

``We're through the phase of trying to get the company on the cheap,'' Penny said. ``The company pretty much made the statement that they won't sell for under $20.''

Shares of TNS rose 19 cents to $17.19 at 4 p.m. in New York Stock Exchange trading (TNS:US). The stock has fallen 11 percent this year.

The company said it will have $312 million to $320 million in sales in 2007, compared with $286.2 million last year. That topped the $308 million estimated by analysts in a Bloomberg survey (TNS:US).

Future revenue should get a boost from a ``very large petroleum company'' and cable companies that have recently signed contracts to use TNS's products, as well as the recent acquisition of JPG Telecom SAS, Chief Executive Officer Henry Graham said today in a conference call.

Excluding some items, 2007 earnings will be $23.6 million to $26 million, or 97 cents to $1.07 a share, the company said. That compares with $18.9 million, or 78 cents, in 2006.

In the first quarter, TNS forecast a profit of $3.4 million to $4.4 million, excluding some costs, or 14 cents to 18 cents a share. That compares with $4 million, or 17 cents, the year before.

First-quarter revenue will be $70 million to $73 million, compared with $65.9 million in 2006.

To contact the reporter on this story: Amy Thomson in New York at athomson6@bloomberg.net

To contact the editor responsible for this story: Cesca Antonelli at fantonelli@bloomberg.net


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