Acxiom Faces Tough Times (Jeff Hankins Publisher’s Note)

Acxiom Corp. of Little Rock, with a software development lab in Fayetteville, has proven to be one of the more turbulent major companies in Arkansas.

Until the last six months, we were lulled into forgetting the tougher times of its history. The company was hiring people left and right with incredible salaries and perks, creating innovative products and being named as one of the best places to work in America. And it was a $1 billion technology company with a soaring stock price for crying out loud — who couldn’t love a high-tech company?

Then reality bites. The stock tumbles as it has done in cycles in the past, and the staff buildup to support new products gets cut as sales expectations of its star product — AbiliTec — fall short.

Acxiom is just as susceptible to market conditions as any other company, and certainly moreso than Wal-Mart. When Montgomery Ward filed for bankruptcy, that was a big customer loss for Acxiom — to the tune of a $35 million writedown in assets plus loss of annual revenue.

In today’s economic conditions, new technology falls in the wants category instead of the needs category. Acxiom’s products can improve a business and create opportunity for new customers, but in most cases they aren’t core needs that most businesses can’t live without. This is a company that can do very well in a strong economy but will have a rough go in tight conditions.

But Acxiom is a worldwide leader in customer relationship management and the aggregation of customer information, and we’ve seen in our own business the value of collecting and managing databases. CRM efforts will remain and grow in company business plans.

That’s why I’m still bullish about what Acxiom can offer long-term. And, no, I’m not a research analyst for an investment banking firm who never saw a stock I didn’t like. However, my disclosure is that I’ve recommended Acxiom at $40 a share, $25 a share and $14 a share. Now it’s in the $10-11 range, and I can’t back off now.

We just can’t expect this stock to perform well in the current business climate. It’s a long-term play on the thinking that knowing and understanding our customers will always be important, and Acxiom brings to the table technology that can help us in that mission.