Broadway & Seymour Inc.'s two-year makeover will need more time to set before the company fully returns to financial health.

The Charlotte, N.C., developer of branch automation software netted $2.9 million last year, 31% more than in 1996, which analysts said was a promising sign.

However, with some projects postponed, customer resources diverted to year-2000 concerns, and a bank merger among its clients, the company will probably disappoint some of Wall Street's optimistic expectations.

"It looks like a break-even first quarter," said Keith Hall, chief financial officer at Broadway & Seymour.

Scott & Stringfellow Inc., a Richmond, Va., investment bank, cut its equity rating recently to "hold" from "long-term buy," which drove the stock's price down 10%, to $7.875 last Friday.

Despite the stumble, Mr. Hall said, the company has been on the mend since 1995, when it began divesting noncore business units to focus on call center and branch automation technology.

Steven Shook, analyst at Interstate Johnson-Lane, Charlotte, maintained a "neutral" rating on the stock and noted the lack of large deals on the horizon that could boost earnings.

"Some of the newer contracts are taking a little longer to roll out," he said. "The year-2000 issue is diverting a lot of attention."

But he said Broadway & Seymour had garnered positive attention recently, such as the sale of its newest product, Touchpoint, to Chase Manhattan Corp.

Touchpoint, a year-old software product, lets operators at call centers instantaneously view callers' entire bank relationships. Banks also would use it to tailor marketing messages or design targeted marketing campaigns.

With software licensing and installation costs of $4 million to $7 million, the system is designed for the top 100 banks.

First American Corp., Nashville, is the most recent customer for the software. Hibernia Corp., Dime Bancorp, and Old Kent Financial Corp. have also bought it.

"It has some pretty big banks deployed, and they seem happy," Mr. Shook said.

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