Despite record earnings in the company's second quarter, investors last week sold shares of Jack Henry & Associates Inc.

The price fell $4.625 Tuesday, putting it at $40.625 and leaving company officials scratching their heads. The selloff occurred right after the Monett, Mo., core banking software provider, which has 1,800 customers, reported positive results.

Revenues rose 34% from the same period a year earlier, to $47.3 million. Net income increased 48%, to $8.3 million, during the quarter, which ended Dec. 31.

"I don't know what they were thinking," said Michael Henry, chairman and chief executive officer. "It was an excellent quarter, which is good considering what is happening out there with year-2000 concerns slowing down purchasing decisions."

A one-time charge associated with Jack Henry's recent acquisition of Peerless Group Inc. of Dallas, a smaller core banking software provider, may have been misinterpreted, Mr. Henry speculated. Several news services announced Jack Henry's earnings as if they were a disappointment, he said.

With the charge, net income rose 29%, to $7.1 million, or 34 cents per share. That fell short of the 39 cents per share that analysts expected, according to First Call. However, without the charge, earnings per share stood at 40 cents-which would have beaten the estimates.

Kevin Dyches, an analyst at Prudential Securities, attributed the selloff to heightened expectations of "momentum investors," who anticipated second-quarter earnings would emulate Jack Henry's first-quarter gain of 87%.

Banks bought more software during the first quarter so they would have time to install it before 2000, Mr. Dyches said. "I would not have been surprised if momentum people sold regardless of what Jack Henry reported," he said.

The year-2000 date change has had a "roller-coaster effect" on Jack Henry's revenues in recent quarters, Mr. Dyches said. He predicted revenue growth would slow during the next several quarters before resuming a more normal rate.

The analyst, who boosted his rating of Jack Henry's stock from "buy" to "strong buy," expects fiscal 1999 earnings per share to grow 39%, to $1.57. The stock closed Friday at $41.9375.

Jack Henry investors also may have been in a sour mood about the disappointing fourth-quarter results from Phoenix International Ltd. of Orlando, another vendor of core banking software.

The company estimates that earnings per share for the quarter ended Dec. 31 would be about 9 cents, compared with analysts' expectations of 20 cents.

The six-year-old company, which has 126 customers, expects revenues of $26 million for the quarter, an increase of 47% from the previous year. When the report was released Jan. 14, Phoenix's stock price fell $5.125, to $9.50.

Bahram Yusefzadeh, chairman and CEO of Phoenix International, said slow Latin American sales and year-2000 concerns curtailed sales.

"We are small, so any one or two transactions will impact our earnings," he said.

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