Bank technology stocks were mixed for the week, as investors continued to sell technology company shares with high valuations.
Sources said a profit-taking atmosphere has set in among bank services firms and is responsible for the prolonged erosion of stock prices for companies such as Computer Sciences Corp., Electronic Data Systems Corp., and Transaction Systems Architects Inc.
Transaction Systems' stock price dropped $6.25 during the week on no discernible news and closed Friday at $26.625. Its stock has lost more than 40% of its value in the last three months.
During the same period, Electronic Data Systems' stock price has lost about 27% of its value, while Computer Sciences' stock has lost more than 14%.
For the week, Electronic Data Systems shares were down another 12.5 cents, to $46.25, while Computer Sciences was off $1.25, closing Friday at $70.75.
In the broader market, investors reacted with surprising ebullience to Friday's Commerce Department report that said the economy grew at a faster- than-expected 4.7% annual clip in the fourth quarter.
Instead of treading cautiously in anticipation of an interest rate hike, many investors increased their trading activity, perhaps buoyed by the apparent lack of inflation in the economy, observers said.
The Nasdaq composite, where many technology firms are traded, rose more than 16 points for the week, to 1,379.84. The Dow Jones industrial average also rose, by 116.61 points, to 6,813.09.
Goldman, Sachs & Co.'s index of U.S.-traded technology firms, which lists many bank vendors, rose 3.87 points, to close at 129.12.
In other news affecting bank technology companies, Richard K. Weingarten, principal at San Francisco-based Montgomery Securities, initiated coverage of BA Merchant Services Inc. with a "buy" rating.
BA Merchant Services, the fourth-largest credit card processor for merchants, was spun off from BankAmerica Corp. in December.
The San Francisco-based money-center banking company owns 65% of the new company, whose public offering was managed by Montgomery.
Mr. Weingarten said BA Merchant Services' core business is compelling because of rising credit card transaction volume. He noted that statistics from the credit card associations indicate charge volume has grown at a compound annual growth rate of 14% during the past 10 years.
Furthermore, he said, BA Merchant Services is well-positioned to compete in the "underpenetrated" Asian market.
"I think it's an interesting opportunity for these guys," he said. "Card usage in Asia is well below the levels of the U.S. but could potentially grow at very high rates."
BA Merchant Services closed Friday at $16.125, a 50-cent drop from its week-earlier close.
In other news, First Data Corp., the Hackensack, N.J.-based card processing giant, said its net income rose 37% in the most recent quarter, to $224 million, or 48 cents per share. This compares to a loss of $389.7 million in the year-earlier period.
Although the earnings met expectations, First Data's stock price lost a dollar for the week, to close at $36.