Magazine article American Banker

Software Maker Warns That Profits to Fall Short

Magazine article American Banker

Software Maker Warns That Profits to Fall Short

Article excerpt

Jack Henry & Associates warned last week that its earnings for the current quarter would be about half of what analysts had expected.

The Monett, Mo., provider of data processing software said its net income for the quarter, the second of its fiscal year, would be 17 to 21 cents a share, down from expectations of 40 cents. In the same quarter a year earlier, the company produced earnings of 38 cents a share.

"We knew that 1999 was going to be slow, and we have been telling people that for a long time, trying to gear them for a slowdown," said Michael E. Henry, chairman and chief executive officer of Jack Henry.

The company blamed year-2000 conversions for hampering sales of new software and lowering earnings, and said it expects a turnaround soon.

"This quarter is the bottom for us," Mr. Henry said. Pent-up demand for new technology should reverse the sales slowdown after the turn of the new year, he added.

"The pipelines look good going into the new year, and the turnaround has already begun on the sales side," he said. "You just do not see it quite as much on the earnings side because of the timing of everything."

Most investors in Jack Henry treated the news as a nonevent. The stock actually rose 5%, to $41.50 on Wednesday, the day the company issued its warning. The stock was trading at $44 at midday on Friday

Kevin Dyches, an analyst at Prudential Securities, said most investors already had factored in an earnings slowdown at some point, despite the lofty projections made by financial analysts, himself included. …

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