Despite positive second-quarter financial results from Boston Communications Group Inc., the company’s stock was down nearly 35 percent Thursday on the news that its largest customer, Verizon Wireless, might transition from the BCGI prepaid solution to its own in-house platform. BCGI said its contract with Verizon is scheduled for renegotiation this year, and the carrier has requested BCGI provide services to assist it in testing its own internal platform in 2004.
Meanwhile, BCGI celebrated a 183-percent year-over-year net income increase to $4.1 million, or 22 cents per share, and revenues that were up 52 percent from last year to $26.4 million. The company’s Billing and Transaction Processing Services accounted for $24.1 million in revenues, up 68 percent from last year, which BCGI said was due to higher than expected billed minutes of use, which averaged 113 minutes per month per subscriber. Net prepaid subscriber additions were 230,000 for the quarter, bringing total prepaid subscribers on the BCGI platform to 3.58 million, up 64 percent from a year ago.
“Our carrier customers continue to show their commitment to the marketing and promotion of profitable, branded prepaid solutions in segments that have previously been under-served,” said E.Y. Snowden, president and chief executive officer of BCGI.
Shares of BCGI were trading at $13.92, down more than 34 percent, mid-day Thursday. Financial analyst groups Raymond James and Morgan Keegan downgraded the stock from Outperform to Market Perform. “The risk surrounding Verizon Wireless has heightened and will overhang the stock for the foreseeable future,” read an analyst note from Raymond James. “While BCGI could still keep the business if Verizon is unsatisfied with its internal system, the firm thinks this issue will likely overhang the stock through 2004.”
