Ideon Group Inc. reported that its first-quarter net income grew to $5.9 million from $301,000 a year earlier.
In a press release, Ideon said that the improved profitability was due primarily to reductions in costs related to abandoned products, research and development, and corporate overhead.
Analysts attributed the growth to the fact that Ideon was concentrating on product development in last year's first quarter. The company subsequently withdrew support for two projects - a PGA Tour card and a registration network called the Family Protection Network - paying a heavy charge.
"A year ago first quarter, they were still in a developmental mode for these new products and they did not expect to be profitable while trying to expand their market," said Leslie Nelkin, analyst for Furman Selz."This reflects the true earning power of the corporation."
Revenues for the first quarter of 1996 also increased, by 7.2% to $64 million.
Ideon's SafeCard Services division also reported a first-quarter revenue increase to $50 million, up 7.7%. Pretax income, however, fell 10% to $9.3 million for the quarter.
Subscribers also fell in the first quarter, by 1.2% to 12,863,000. The company cited buildups in information technology, a contract cancellation with Texaco Refining and Marketing Inc., and a contract extension with Sears, Roebuck and Co. as the reasons for the changes.
On April 22, Ideon announced a merger with CUC International, Stamford, Conn., in a stock transaction valued at $375 million.
In related news, Ideon said John Ellis "Jeb" Bush, son of former President George Bush, has resigned as a member of the board of directors.
