Before March 2000, some on Wall Street thought they had struck gold in a technology firm under the wing of a mid-cap regional bank.

Digital Signature Trust, the technology unit of Zions Bancorp, seemed poised to soar, analysts said, with its key product a third-party certification for online information exchanges.

But a revenue windfall from DST has proved to be ephemeral.

Instead of “a revenue run rate in excess of $100 million by mid- to late 2000,” as expected by Erick Reim, formerly an analyst at U.S. Bancorp Piper Jaffray back in February 2000, the unit’s revenues have been creeping along in the single digits.

Still Zions’ DST unit is signing on new customers and getting new contracts, most recently receiving approval from the state of Alaska to be one of the firms offering digital certificates to the state’s residents. And recent acquisitions, with icomXpress being the largest, will allow it to offer customers an “end-to-end” digital certification service, rather than just the certificate process. The company’s Web site features a photo of a surly teenager with the title, “I am chairman of the Fed.”

Expected 2001 revenues of $4 million should increase to $20 million in annualized revenues during the fourth quarter thanks to the July acquisitions of three small software companies.

“We continue to view the bank’s E-Commerce initiatives as an embedded option in Zions’ shares,” said Rosalind Looby of Credit Suisse First Boston in a recent report.

Executives are candid about how the decline in corporate spending on technology has unexpectedly delayed returns on their investment.

“The technology sector isn’t in a recession, frankly, it’s in a depression,” said Danne Buchanan, an executive vice president of E-Business at Zions Bancorp. With company sales a key revenue driver for DST, what happens with the technology sector and corporate spending “is a wild card,” he said.

Past hopes of completely or partially spinning off the unit, which could have valued DST on a par with stand-alone public competitors such as VeriSign Inc., have now faded. And now analysts want to know how long Zions will continue pouring money into the business — even though it has had chief executive Harris Simmons’ support since its inception — if an adequate volume of users does not materialize.

“It’s a pretty intriguing technology,” said John Kline of Sandler O’Neill & Partners. “I just wouldn’t want them to lose too much money on it.”

From DST’s headquarters near the Salt Lake City airport, Mr. Buchanan said Zions has never eliminated the option of a sale or closure. “At end of the day, it’s important that we can create value — if we can’t, we’ll either exit or close it,” he said.

Hiring and technology expenses have been shaving off about one cent a month from its earnings per share, the company said in its fourth-quarter call. The acquisition of icomXpress and the other two small companies should raise this to about 18 cents annually.

“The financial risk and potential distraction involved in e-commerce investments remain high, particularly given the perception of increased capital at risk at this juncture,” wrote Ms. Looby of CS First Boston.

Though the technology sector continues to flounder, there is a silver lining for DST: its government customers. Contracts with such huge organizations as the Social Security Administration and the Department of Defense aren’t affected by the decline in technology spending by corporate America. The majority of DST revenues come from set-up fees and pilot fees with the Federal government.

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