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Merrill Downgrades Bottomline Technologies Shares


Bottomline Technologies (EPAY) posted a Q2 loss of $0.02 per share. Merrill Lynch downgraded its rating on shares of the corporate payment software firm to long term accumulate from buy. Merrill maintains its near term accumulate rating.

Analyst Edward McCabe says current economic conditions will continue to draw out purchase decisions for customers. Despite a sequential increase in overall backlog in Q2, deferred revenue came down and days sales outstanding (DSOs) jumped, both of which may indicate some stress in making Q3 numbers. McCabe cut his $0.01 fiscal 2001 (June) EPS estimate to a $0.19 loss and his fiscal 2002 EPS estimate of $0.69 to $0.61.

While he is encouraged by management's comments about customer interest in Bottomline's NetTransact product, McCabe believes it will still take some time for widespread adoption of the product to take off.


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