Online Resource?s Chair Pledges to Buy 10,000 Shares

The chairman of beleaguered Online Resources Corp. (NASDAQ: ORCC) is putting his money where his mouth is, pledging to buy the stock following its 29 percent decline resulting from a sell off by investors after it reported third quarter 2007 earnings last Thursday.

Online Resources Chairman and CEO Matthew P. Lawlor yesterday touted the company and promised to buy “approximately” 10,000 shares of the company’s common stock in an open letter to company shareholders and other stakeholders.

Lawlor already owns more than 1 million shares of the company’s stock, or a little less than 4 percent of the 26.48 million outstanding shares, according to filings with the U.S. Securities and Exchange Commission.

The company’s shares fell from $12.26 on Thursday to $7.86 at the close of trading on Monday. Matthew J. McCormack, the Friedman, Billings, Ramsey & Co. analyst who cut on Monday his 2008 price target on the stock from $18 to $12, blamed the fall to a lack of investor confidence in management after the company lowered earnings expectations for 2008.

The stock rallied yesterday to close at $8.76. Buying 10,000 shares at that price would cost $87,600 before commissions and other charges. Online Resources was trading mid-day today at $9.09, up nearly 4 percent.

Lawlor wrote he plans to purchase the additional shares beginning Thursday. “This notice of my intent to purchase offers investors time to absorb my intentions and my stated personal belief that the company is significantly undervalued. At a price level consistent with yesterday’s close, my initial purchase of Online Resources shares will likely be approximately 10,000 shares. And if I can responsibly increase my investment, I will.”

Lawlor added: “In my judgment, even at the low-end of its target ranges, today Online Resources is a better investment value than ever before, with lower risk and a stronger strategic outlook for growth.”

McCormack didn’t seem impressed by Lawlor’s plans. “I think he (Lawlor) should focus on running his company, not his stock price,” McCormack told the Washington Post. “It’s going to take several quarters of strong execution to get the stock moving materially higher.”

Lawlor said in the letter that the company will publish its official guidance for 2008 in early December, after completion of its budget. The company’s preliminary performance targets are revenue growth of 20 percent and core earnings per share growth of 30 percent. Online Resources is a provider of online bill payment services to financial institutions that rebrand the product. The Chantilly, Va.-based firm also markets the Virtual Collection Agent, an online auction system for consumer debt recovery.