Lender Processing Services Inc (LPS), a provider of integrated technology and outsourced services to the mortgage lending industry in the United States, recently announced that its Chief Executive Officer (CEO) and President Jeffrey S. Carbiener has stepped down citing health issues.
Jeffrey has served as the President and CEO of Lender Processing since its spin-off from the parent company Fidelity National Information Services, Inc (FIS) in July 2008.
Jeffrey played a key role in the development of the company since its formation and has also navigated Lender Processing through the economic slowdown quite impressively. During his tenure of three years the company scaled new heights. We believe the task of finding a suitable successor for Jeffrey will be very difficult for the company.
Until a permanent CEO is selected, Lee A. Kennedy, the executive chairman of the company and the former CEO of Fidelity National will serve as the interim CEO and president. Jeffrey, however, will remain in the company in an advisory capacity.
In mid June, Lender Processing reduced its second quarter 2011 adjusted earnings outlook to 54 cents–56 cents from 79 cents–82 cents due to a further drop in default volume and origination activities, particularly for refinancing. Additionally, higher regulatory and legal expenses forced the company to lower its outlook. The company also expects second quarter revenue to plunge 8% sequentially.
Moreover, market conditions for origination and default businesses are expected to remain challenging for the rest of the year. Thus, the departure of Jeffery at this critical juncture will further add to the uncertainly.
The company’s search for the new CEO has begun, but as long as the new CEO is not appointed we prefer to remain on the sidelines. Consequently, we maintain our long-term Underperform recommendation on the stock. Lender Processing currently retains a Zacks #5 Rank (short-term Strong Sell rating).
