LivePerson Inc.’s (LPSN:US) biggest one-day tumble in almost 12 years makes the developer of website tracking software an acquisition target, according to Benchmark Co. and Oppenheimer & Co.
The 36 percent plunge in LivePerson shares in New York yesterday reduced the company’s market capitalization to $454 million, the lowest level since October 2010.
LivePerson, which makes software that allows businesses to track people on their websites, extended the past year’s 48 percent slump after lowering its full-year revenue (LPSN:US) forecast by as much as 3.8 percent on the loss of a customer. Companies such as International Business Machines Corp., the world’s biggest computer-services provider, and Oracle Inc. (ORCL:US) may look to purchase the developer, Oppenheimer analyst Brian Schwartz said.
“These acquirers will be most interested in LivePerson’s technology, which is highly sophisticated and difficult to replicate,” Schwartz, who cut LivePerson to the equivalent of hold May 8, said by phone from San Francisco yesterday. “The selloff in the stock would give these companies the ability to acquire LivePerson more accretively than previously.”
Yesterday’s tumble reduced LivePerson’s valuation (LPSN:US) in New York to 25 times estimated earnings, the cheapest level since October 2011, data compiled by Bloomberg show. At least four of the 15 analysts (LPSN:US) covering the New York-based company that has operations in Tel Aviv downgraded the stock, according to data compiled by Bloomberg.
Oracle, based in Redwood City, California, purchased RightNow Technologies Inc. for $1.5 billion in October 2011 to gain customer-service expertise. Armonk, New York-based IBM bought DemandTec Inc. in December 2011 to add Internet-based tools to help businesses adjust promotions based on buying patterns.
SAP AG spent $4.3 billion last October buying Ariba Inc., which allows companies to trade products online via the so-called cloud. The Walldorf, Germany-based company purchased cloud-software provider SuccessFactors Inc. a year ago.
“If you look at the companies that LivePerson competes with, there are only two public companies left. The other ones have been bought,” Jon Hickman, an analyst at Ladenburg Thalmann & Co. in New York, who has a buy rating on the shares, said by phone yesterday. “LivePerson might have the same fate, and get taken out by a big software company.”
Aside from LivePerson, Mountain View, California-based eGain Communications Corp. (EGAN:US) remains independent, Hickman said.
Lori Bosio, IBM’s software group media director, said by phone in New York yesterday that the company doesn’t comment on deal speculation. At Oracle, Jessica Moore in corporate communications said that the software marker declined to comment in an e-mail yesterday. Erin Kang, a media official for LivePerson in New York, said by e-mail that no one from the company was available.
LivePerson’s 50-day volatility quadrupled yesterday to a four-year high of 106 from a record low of 24.2 May 8.
The company reported a net loss (LPSN:US) in the first quarter of $232,000, its first unprofitable three months since the quarter ended December 2008, data compiled by Bloomberg show.
LivePerson’s sales of $42.5 million, which rose 16 percent from a year ago, missed analysts’ estimates by 0.1 percent. Chief Financial Officer Daniel Murphy said that a major customer’s cancellation and continued economic weakness in Europe spurred the company to lower its full-year outlook.
Shares of LivePerson in Tel Aviv sank 23 percent to 35.07 shekels yesterday, or $9.87, the lowest level since the company started trading in Israel. That’s still a record premium to the U.S. stock, which declined to $8.12.
“This one hits them pretty hard, but I don’t understand shares being down so far,” Mark Schappel, a analyst at Benchmark in New York who rates LivePerson hold, said by phone yesterday. “I thought there’d be more support from an M&A perspective.”
The Bloomberg Israel-US Equity Index of the biggest Israeli stocks in the U.S. added 0.7 percent to 91.99 yesterday, the highest level in more than a year. Israel’s benchmark TA-25 Index declined 0.5 percent to 1,203.19.
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