Zacks_Analysts' Blog : Digital River's Board Approves Buyback - Analyst Blog

E-commerce services provider Digital River, Inc. (DRIV) recently announced that the Board of Directors has authorized the company to buy back shares worth $100 million. Management stated that the company’s strong balance sheet provides it the financial flexibility to buy back shares and increase shareholders' value.

As of June 30, 2011, Digital River had cash and equivalents of $432.4 million, down from $565.0 million at the end of December 2010. In 2010, Digital River repurchased 943,881 shares for $35 million at an average price of $37.08.  

On November 1, 2010, Digital River issued senior convertible notes worth $345.0 million in aggregate principal amount in a private, unregistered offering. The proceeds from the 2010 notes issue were used to fund the $35.0 million stock buy-back program completed in 2010 and the remainder of the net proceeds was used for general corporate and strategic purposes.

Earlier, the company reported revenues of $92.5 million in the second quarter of 2011, up 13.1% year over year, in line with management’s guidance. Excluding one-time items, the company reported earnings per share of $0.05, beating the Zacks Consensus Estimate by a penny.

DigitalRiverrecently appointed Mr. Stefan Schulz as its Chief Financial Officer (CFO). Mr. Schulz took over this responsibility from Mr. Tom Donnelly, who became the President of Digital River in March 2011.

Mr. Donnelly joined Digital River in 2005 as its Treasurer and Vice President of Finance and became the CFO four months later. Over the past year, Mr. Donnelly has been managing the company’s delivery and IT organizations.

We continue to maintain a Neutral recommendation on Digital River. Our recommendation is supported by a Zacks #3 Rank, which translates into a short-term rating of Hold.