Bank technology vendors - from both New and Old Economy backgrounds - are reporting strong earnings this quarter.
Commerce One Inc., which creates business-to-business electronic commerce exchanges and counts Citigroup Inc. among its major customers, increased its first-quarter revenues to $35 million from $2.1 million a year earlier. Its net loss widened to $14 million, from $7.8 million, causing it to lose nine cents a share, three cents less than Wall Street expected. Commerce One's stock rose $22 last week, to $55 at Thursday's close.
Jack Henry & Associates Inc., a longtime provider of core banking software to community banks, said last week that it had revenues of $56.4 million in its third quarter, up 28% from 1999. Net income rose 22%, to $10.1 million, and earnings per share, at 24 cents, were a penny better than expected.
"The market for bank technology has quickly rebounded from its Y2K doldrums, and we see increasing demand for all products and services," said Michael E. Henry, chairman and chief executive officer of the Monett, Mo.-based company.
Kevin Dyches, an analyst at Prudential Securities, said Jack Henry is showing a large order backlog. He said $91 million of closed deals have not yet been booked, up from $66 million a year earlier.
"That is pretty good performance, to have that kind of a backlog," Mr. Dyches said. "The other thing that surprised me is how hot Internet banking is."
Jack Henry said it sold its NetTeller Internet banking software to 71 banks in the most recent quarter, compared with 45 in the preceding quarter and 23 in the quarter before that. It plans to introduce an Internet service that would make its bank customers the center of commercial and retail electronic commerce activity in their respective communities.
Jack Henry's "customers are saying, 'We are excited about the portal and about Internet banking,' " Mr. Dyches said. "Now that Glass-Steagall has gone away, maybe [banks] can become a cultural center for commerce. It is a big trend."
Jack Henry's stock closed at $38.5625 Thursday, up $6.625 for the week.