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We like to think that when we deposit a dollar at the bank, it goes into a big vault and we can pull out that same dollar at any time. But that¿s not how the U.S. banking system works. Banks take that money and invest it to make money themselves, so cash gets spread around. This, naturally, leads to a big risk: What happens if those investments go sour? Well, you¿d be out of luck. You can¿t get your dollar back.
The Federal Reserve doesn¿t like that scenario, so it prohibits banks from putting all the cash it has on deposit on the line. In fact, the Fed forces banks to keep a portion of their assets at the Federal Reserve itself, to make sure that some of your assets won¿t get squandered if the bank¿s bets go south. These are called ¿reserves,¿ (hence, Federal Reserve. Got it? Good), and usually amount to 10% of the total cash kept in checking accounts.
These reserves are never exactly 10%, and banks like to keep a little extra in reserve ¿ not, as you might think, to make you more comfortable that they¿re in good financial shape, but rather so they can take that excess and lend it to other banks and make money off it. (They¿re banks, they can¿t help themselves.) The rate at which they make these loans is called the Federal Funds rate, which is set by the Federal Reserve¿s Federal Open Market Committee.
When you hear people chattering about how the Fed cut or hiked interest rates, this is what they¿re talking about: the interest rate banks can charge for lending money from their reserves. This begs the question: If these are essentially loans between banks, why is the Fed Funds rate so important for the rest of the economy?
Well, simply put, because loans make the financial world go round. Bank A lends Bank B $10,000 at a Fed Funds rate of 5%. Bank B then lends out $10,000 to a small business at 7%. The small business then takes that money and expands the business and hires new workers. Now someone is employed, Bank B has made interest off the loan, and Bank A is the richer for making it all happen. It¿s perhaps overly simplistic, but you get the idea. When you want the economy to thrive, you make lending cheaper.
Of course, sometimes you don¿t want the economy to thrive. In fact, you might want it to cool down, mostly to avoid money flooding the system and causing inflation. In that case, the Fed raises interest rates, making it difficult to lend or borrow.
Home / Markets
Wednesday, May 07, 2008
Hits and Misses: Wednesday's Earnings Reports
Associated Press
Marsh & McLennan
Marsh & McLennan (MMC) lost money in the first quarter as the insurance broker's corporate security business suffered a fundamental deterioration in value, the company said Wednesday.
Marsh & McLennan lost $210 million, or 40 cents per share, in the first quarter. In the first quarter last year, Marsh & McLennan earned $268 million, or 49 cents per share.
The company attributed the loss mainly to a $425 million "asset impairment" charge incurred by Marsh's corporate security firm, Kroll.
Marsh is examining how best to create value from the business, which the company bought in 2004. In completing its assessment, the company determined the value of the business has fundamentally deteriorated, warranting a goodwill impairment charge.
Core profit, excluding the Kroll charge and other unusual costs, was 46 cents per share in the first quarter. Analysts polled by Thomson Reuters forecast profit of 45 cents per share.
Revenue climbed 8% to $3.05 billion from $2.81 billion. Analysts expected revenue of $2.92 billion.
The company's insurance brokerage business, Marsh, reported 7% growth in revenue to $1.2 billion, fueled by growth in the Asia Pacific region. Marsh said it achieved revenue growth "in an environment of significant price competition in the global commercial property and casualty insurance marketplace."
Marsh charges commissions for matching insurers with clients who need insurance. Insurers, padded with cash after two years without a major catastrophe, are competing for clients by slashing prices. With premium rates tumbling around the industry, insurers are reluctant to pay brokers fatter commissions.
An industry group, the Council of Insurance Agents & Brokers, reported insurance premiums declined an average of 13.5% in the first quarter. Insurance commissions are typically assessed as a percentage of premium.
The company's reinsurance brokerage business -- which brokers a type of insurance covering losses on other insurers' policies -- slipped 6% to $273 million. Reinsurance prices continue to dwindle as insurers opt to shoulder risk instead of passing it off to a reinsurer, the company said.
The bright spot was Marsh & McLennan's consulting business, Mercer, which reported 15% revenue growth to $1.3 billion. The unit collected higher fees for consulting, outsourcing and investment management.
Chief Executive Brian Duperreault said in a statement the company has improved at retaining clients. Duperreault was hired from Ace Ltd. earlier this year, after former CEO Michael Cherkasky stepped down, to help stem an exodus of clients to competitors like Aon Corp.
Duperreault is tasked with reviving a business that has never recovered from an investigation by former New York Attorney General Eliot Spitzer. The investigation resulted in an $850 million fine and blotted out a source of revenue that contributed half of Marsh & McLennan's profit.
Marsh's stock fell from $45 to about $25 after the settlement, and has been mostly flat since. The stock closed Tuesday at $27.58.
DirecTV
Satellite television company DirecTV (DTV) said Wednesday its first-quarter earnings rose 10.4%, as it acquired more subscribers in the U.S. and Latin America and customers spent more on high-definition and video recording services.
DirecTV Group Inc. also said media mogul John Malone's Liberty Media Corp. had agreed to restrict its voting interest to 48% in exchange for DirecTV's decision to increase its share repurchase program to $3 billion, funded by up to $2.4 billion in new debt.
Its shares rose $1.10, or 4.3%, to $26.90 in premarket trading.
The El Segundo, Calif.-based company said net income climbed to $371 million, or 32 cents per share, in the three months ended March 31 from $336 million, or 27 cents per share, a year ago.
Revenue rose 17% to $4.59 billion from $3.91 billion.
Analysts surveyed by Thomson Reuters expected a net profit of 31 cents per share on revenue of $4.47 billion.
DirecTV said it added 275,000 net U.S. subscribers, increasing its domestic subscriber base by 5.2% to 17.1 million.
Average monthly revenue per subscriber rose 8.6% from a year ago to $79.70, driven by price increases for programming, higher fees for HD and DVR equipment and services and better pay-per-view sales.
It added 200,000 net subscribers in Latin America, boosting the subscriber base 24% to 3.5 million. Monthly revenue per subscriber rose 20% to $53.52, thanks to a weak U.S. currency and growth in Venezuela and Argentina.
In late February, Liberty Media acquired a 41% stake in DirecTV by swapping a 16% stake in News Corp. (NWS) plus $625 million in cash.
In April, Liberty increased its stake in the satellite television provider to 48%, and analysts had expected Liberty to attempt to buy the whole company.
The Walt Disney Co.
The Hollywood writers strike hurt TV ratings and ad revenue at The Walt Disney Co.'s (DIS) ABC network, but not enough to stop the company's second-quarter net profit from growing 22%.
The strike also raised prices in the spot ad market as the lull in network shows shrunk available ad time. That bodes well for the upcoming upfront sales presentation to advertising agencies in New York, which will affect pricing for the coming fall TV season, Disney Chief Executive Robert Iger said.
"The fact that ratings are returning to ABC since the work stoppage, we think we're in good shape revenue-wise for the rest of the year," he told analysts on a conference call.
The company said Tuesday it earned $1.13 billion, or 58 cents per share, in the quarter ended March 29, compared with $931 million, or 44 cents per share, a year earlier. Revenue grew 10% to $8.71 billion.
Analysts expected earnings of 51 cents per share on $8.47 billion in revenue, according to Thomson Reuters.
Disney shares jumped 96 cents, or 2.9%, to $34.69 in after-hours trading. The shares gained 44 cents to end the regular trading session at $33.73 before the earnings were announced.
Disney said international sales of shows such as "Grey's Anatomy" helped revenue from Disney's media networks grow 5% to $3.61 billion, despite the 100-day writers strike that ended in February.
The company also said a weak U.S. dollar helped keep American vacationers closer to home and attracted tourists from abroad, increasing theme park attendance and spending.
Parks and resorts revenue grew 11% to $2.73 billion, and hotel bookings through 2008 were trending higher than last year, the company said.
A cheaper mix of hotel room offerings and bargains for extended stays also kept tourists coming, Iger said. Domestic park attendance was up 5%, while parks in Paris and Hong Kong saw double-digit increases.
"While we don't know where the marketplace will take us, we believe we're much better positioned in a difficult economic cycle than we were in the past, certainly back in 1991," Iger said.
Richard Greenfield, an analyst with Pali Research, said parks revenues were expected to be hurt for the rest of the year but said "they continue to hold up better than expected."
The results for parks at home and abroad also benefited from an Easter holiday that fell in the second quarter, the company said.
Disney reported studio revenue increased 18% to $1.82 billion, with box office sales boosted by "National Treasure 2: Book of Secrets" and the 3-D hit "Hannah Montana/Miley Cyrus: Best of Both Worlds."
The company said its recent move to take back operation of 220 Disney Store outlets in North America from The Children's Place Retail Stores Inc. would modestly reduce profits in its consumer products division for the rest of the year.
Consumer products sales in the most recent quarter increased 10% to $551 million, while operating profits for that segment dropped 14% to $107 million.
Having control of the retail stores would help Disney sell products based on franchises from Hannah Montana to Pirates of the Caribbean, Iger said.
He said the company expected to reduce the number of stores to be closed from the 100 already announced.
"It will give us the ability to be more focused in general and basically take advantage of better locations in the marketplace," he said.
Stone Energy Corp.
Oil and natural gas producer Stone Energy Corp. said Tuesday its first-quarter profit rose sharply as commodity prices soared.
Net income for the first three months of 2008 rose to $62.2 million, or $2.22 per share, from $10.5 million, or 38 cents per share, in the same period a year earlier.
Analysts predicted the company would earn $1.76 per share, according to a survey by Thomson Reuters.
Revenue increased to $203.2 million from $173.3 million. Analysts forecast revenue of $190 million.
Daily production fell 21% to the equivalent of 185 million cubic feet of gas, largely because of the recent sale of properties in the Rocky Mountains and the Gulf of Mexico.
Average selling prices rose sharply, however, to $95.72 per barrel of oil and $8.82 per 1,000 cubic feet of natural gas. On a gas-equivalent basis, that is 49% higher than during the same time last year.
In the second quarter, Stone expects to produce the equivalent of 195 million to 210 million cubic feet of gas.
Stone Energy shares rose $2.39, or 3.8%, to close at $65.85.
SkyWest Inc.
SkyWest Inc. (SKYW) said Wednesday its first-quarter earnings fell 16%, hurt by rapidly accelerating fuel prices and higher maintenance costs.
The airline earned $29.1 million, or 47 cents per share, compared with $34.8 million, or 53 cents per share, in the year-ago period.
The company said it took a $6.2 million pretax loss in the quarter on its pro-rate flying contracts because of significantly higher fuel costs, which SkyWest said have risen faster than the company has been able to increase fares to offset them.
SkyWest also took a $10.2 million pretax loss related to maintenance costs, including the purchase of new aircraft parts and repairs to some of its regional jets.
Revenue rose 10% to $868 million, from $789 million a year earlier.
Analysts were expecting a profit of 60 cents per share on revenue of $841.9 million, according to a poll by Thomson Reuters.
Traffic for the quarter rose 4.2% to 4.19 billion revenue passenger miles, from 4.02 billion a year earlier.
A revenue passenger mile is an industry unit that represents one paying passenger flown one mile.
Capacity increased 5.4% to 5.58 billion available seat miles, from 5.29 billion a year earlier. An available seat mile measures the number of seats available and number of miles flown.
Lamar Advertising Co.
Lamar Advertising Co. (LAMR), which owns and operates outdoor advertising and logo sign displays, said Wednesday that it swung to a loss in the first quarter, hurt by higher expenses and minimal sales growth.
For the three months ended March 31, the company reported a loss applicable to common shareholders of $1.6 million, or 2 cents per share, compared with profit of $8.7 million, or 9 cents per share, in the year-ago period.
Analysts polled by Thomson Reuters, on average, estimated a loss of 7 cents per share on sales of $280.7 million.
Revenue rose 3% to $282.8 million from $275.2 million in the first quarter of 2007.
Adjusted earnings before interest, taxes, depreciation and amortization increased slightly to $114.2 million from $114 million in the prior-year quarter.
Total operating expenses rose 1% to $246.7 million.
Direct advertising and general and administrative expenses rose 4% to $155.8 million, while corporate expenses rose 11% to $12.8 million. Interest expense in the quarter rose 28% to $40.8 million.
Outdoor operating income was essentially flat with the year-ago period.
Devon Energy Corp.
Devon Energy Corp. (DVN), the largest U.S.-based independent oil and natural gas exploration and production company, said Wednesday its first-quarter profit rose 15% as higher prices and production offset one-time charges and increased expenses.
After payment of preferred dividends, net income for the three months ended March 31 rose to $747 million, or $1.66 per share, compared with $649 million, or $1.44 per share, in the year-earlier quarter.
Excluding one-time charges -- including a $780 million loss on derivatives instruments due to rising natural gas prices -- the company posted earnings per share of $2.74.
Analysts polled by Thomson Reuters expected, on average, earnings per share of $2.33. Such estimates typically exclude one-time charges and gains.
Revenue climbed 20% to $2.98 billion, less than the $3.28 billion analysts were expecting.
Production rose 9% over the year-earlier quarter to 640,000 barrels of oil equivalent per day. The company's average price of natural gas rose to $8.03 per thousand cubic feet, from $6.77 per thousand cubic feet, and the average price of crude oil rose to $97.67 per 42-gallon barrel, from $58.33 per barrel.
Expenses rose 27% to $2.1 billion, from $1.6 billion last year.
Speedway Motorsports Inc.
Speedway Motorsports Inc. (TRK) said Wednesday its first-quarter profit slipped 3% on costs related to its New Hampshire Motor Speedway acquisition, but results surpassed analysts' estimates.
The operator of motorsports raceways reported net income fell to $30.9 million, or 71 cents per share, compared with $31.9 million, or 72 cents per share, a year earlier.
Analysts polled by Thomson Reuters expected earnings of 69 cents per share.
Net interest expense surged to $9.4 million from $4.7 million due to increased borrowings related to the November acquisition of New Hampshire Motor Speedway
For the period ended March 31, revenue rose 2% to $155.2 million from $152.2 million, but missed Wall Street's estimate of $157.6 million.
Event-related revenue climbed to $51.3 million from $49 million, while NASCAR broadcasting revenue increased to $37.6 million from $36.9 million.
Admission revenue slipped to $53.6 million from $56.5 million.
Chief Operating Officer and President H.A. Wheeler said in a statement that the company's improved revenue results came from increased sponsorships, luxury suite rentals, ancillary broadcasting rights and other event-related revenue.
Owens Corning
Owens Corning (OC), which makes insulation, roofing materials and other building products, on Wednesday said it swung to a first-quarter loss, hurt by weak demand and lower selling prices on some products amid a difficult housing environment.
Quarterly loss totaled $15 million, or 12 cents per share, compared with a profit of $1 million, or a penny per share last year. Excluding one-time items such as an impairment charge for selling some assets in Belgium, net income was 7 cents per share.
Analysts polled by Thomson Reuters, on average, predicted a profit of 2 cents per share. Analysts' estimates exclude one-time items.
Revenue rose 20% to $1.35 billion from $1.12 billion last year. Sales were helped by its acquisition of Saint-Gobain's reinforcements and composite fabrics business in November 2007, the company said.
Analysts expected revenue of $1.2 billion.
The company said it had weaker demand and lower selling prices for residential insulation amid a difficult housing environment. It also faced higher energy and raw material prices in its roofing and asphalt business.
NCR Corp.
Cash-machine maker NCR Corp. (NCR) said Wednesday that its first-quarter earnings increased 41% on record sales to banks and retailers and boosted its revenue expectations.
Shares jumped 5%, or $1.26, to $26.49 in premarket trading.
NCR, which also makes checkout scanners for the retail stores and other self-service technology, said it earned $48 million, or 28 cents a share, in the quarter ended March 31, compared with $34 million, or 19 cents a share, for the same period in 2007.
The company reported revenue of $1.18 billion compared with $992 million in 2007.
Analysts surveyed by Thomson Reuters expected earnings of 17 cents a share on revenue of $1.06 billion.
Excluding the results of Teradata Corp. and charges, NCR would have earned $49 million, or 28 cents per share, for the quarter compared with a loss of $9 million, or a 5 cent loss per share, in 2007. NCR spun off Teradata, which makes data warehousing software, on Oct. 1.
NCR boosted its outlook for 2008 revenue growth from continuing operations from a range of 3% to 5%, to a range of 5% to 7%.
NCR said its revenue for the first quarter increased by 15% in the Americas region, driven primarily by sales growth to banks and retailers. Revenue increased 30% in the Europe-Middle East-Africa region, and 7% in the Asia-Pacific-Japan region.
NCR also posted a $16 million gain from the sale of a Canadian manufacturing plant.
"The new NCR has started 2008 on a positive note, delivering strong revenue growth, margin expansion and much improved cash flow," said Bill Nuti, chairman and chief executive officer.
Cognizant Technology Solutions Corp.
Information technology and outsourcing company Cognizant Technology Solutions Corp. (CTSH) said Wednesday its first-quarter profit shot up 35% on higher revenue across its business segments.
But the company offered conservative guidance for the June quarter, and shares fell in premarket trading.
Net income for the three months ended March 31 rose to $101.9 million, or 34 cents per share, from $75.5 million or 25 cents per share, in the 2007 first quarter.
Excluding 4 cents in stock-based compensation expenses and one-time costs and gains, the company earned 38 cents per share. One-time items included an Indian tax on stock-based fringe benefits of $900,000.
Revenue rose 40% to $643.1 million, from $460.3 million last year.
Analysts polled by Thomson Reuters, on average, expected profit of 33 cents per share, on revenue of $642.9 million. That estimate included stock option expenses. Analysts typically exclude one-time expenses.
The company said its healthcare, retail/manufacturing/logistics and other segments all grew 10% or more from the fourth quarter of 2007. European operations rose 12% from the December quarter.
In active premarket electronic trading, Cognizant Technology shares slid $2.35, or 7%, to $31.40, from their regular session close Tuesday at $33.75.
Checkpoint Systems Inc.
Security-products maker Checkpoint Systems Inc (CKP). on Wednesday said first-quarter profit fell 3% due to restructuring and other one-time charges, but sales rose due to acquisitions and the weaker dollar.
Quarterly profit fell to $4.8 million, or 12 cents per share, from $5 million, or 12 cents per share last year. Excluding one-time items, including a deferred compensation expense adjustment and restructuring charges, net income was 16 cents per share.
Revenue rose 22% to $209.6 million from $171.2 million last year, helped by the benefit of the weaker dollar and acquisitions.
The company expects 2008 earnings from continuing operations will be between $1.65 and $1.75 per share, with revenue growth in the low double digits.
Orbitz Worldwide Inc.
Online travel company Orbitz Worldwide Inc. (OWW) said Wednesday it posted a larger first-quarter loss, as higher costs and weak bookings in the U.S. tugged down results.
For the period that ended March 31, Orbitz, which went public in July, posted a bigger loss of $15 million, or a loss of 18 cents per share, from a loss of $10 million a year earlier. A per share figure was not provided for the year-ago quarter.
Earnings, when adjusted, declined to $21 million, compared with $30 million a year earlier, Orbitz said.
Sales rose about 3% to $219 million from $212 million a year earlier.
Analysts polled by Thomson Reuters forecast a 4-cent per share profit and on sales of $213.9 million.
"We anticipated that the first quarter of 2008 would be a difficult comparison against a very strong 2007 first quarter," Chief Executive and President Steven Barnhart said in a statement.
Gross bookings were flat at $2.9 billion, but increased 41% internationally, helped by a weak U.S. dollar. Results were especially strong in Asia-Pacific markets, such as Australia and Japan.
However, domestic bookings declined 6% in the first quarter to $2.4 billion.
Marketing expenses rose 5% to $85 million in the first quarter. Selling, general and administrative expenses rose 10%, as Orbitz hired more people to fill positions for its hotel sourcing team, along with financial and legal openings.
OGE Energy Corp.
OGE Energy Corp. (OGE) said Wednesday its first-quarter earnings fell 24% as a bigger loss at its utility unit Oklahoma Gas & Electric Co. offset growth at its natural gas pipeline business Enogex LLC.
The company earned $13 million, or 14 cents per share, compared with $17.2 million, or 19 cents per share, in the year-ago quarter.
The company said Oklahoma Gas & Electric posted a loss of 12 cents per share, compared with a year-ago profit of 2 cents per share. The shortfall was mostly due to higher operation and maintenance expenses, which increased to $94 million from $74 million a year earlier, OGE said.
Enogex's profit rose to 24 cents per share from 17 cents per share a year earlier, helped by higher margins and natural gas volumes.
Revenue rose to 13% to $994.7 million, from $881.5 million in the prior-year period.
OGE Energy also reaffirmed its outlook for the year.
FTI Consulting Inc.
Business advisory firm FTI Consulting Inc. (FCN) said Wednesday its first-quarter profit more than doubled, surpassing Wall Street's expectations, as fallout from the subprime mortgage mess spurred strong revenue growth across all business segments.
For the three months ended March 31, the company reported income of $31.3 million, or 59 cents per share, compared with $15.3 million, or 36 cents per share, in the year-ago period.
The per-share results reflect a 24% increase in the number of shares outstanding in the 2008 quarter, to 52.7 million, from 42.5 million in the 2007 quarter.
Revenue jumped 35% to $307.1 million, from $227.7 million in the first quarter of 2007.
Analysts polled by Thomson Reuters, on average, estimated earnings of 47 cents per share on revenue of $287.1 million.
Revenue from the company's technology segment grew 71%, to $56.5 million, while sales from its corporate finance and restructuring division increased 28%, to $79.3 million. Revenue in this segment was driven by increasing demand from sectors affected by the housing downturn, such as building materials, retail, consumer durables and insurers, FTI said. There was also strong demand from the health care sector for both consulting and restructuring services.
Strategic communications revenue grew 43% and economic consulting revenue gained 41% due to credit and liquidity issues and strategic merger-and-acquisition assignments.
"The global credit crisis in its various forms continued to be a significant driver of work across all of our business segments," said Jack Dunn, president and chief executive, in a statement. "Subprime issues remained unresolved and the housing market continued to erode, undermining consumer net worth and confidence."
The company closed seven acquisitions in the first quarter, and two additional acquisitions in the first week of April, adding more than 400 employees. Going forward, the company said it has a full acquisition pipeline and will continue to "aggressively" pursue acquisitions throughout 2008.
Interstate Hotels & Resorts Inc.
Interstate Hotels & Resorts Inc. (IHR) said Wednesday it swung to a first-quarter loss as the year-ago benefited from a unit sale.
The hotel management company reported a loss for the period ended March 31 of $286,000, or a penny per share, compared with a profit of $15.9 million, or 50 cents per share, in the prior year.
Excluding write-offs and other items, Interstate reported a loss of $1.1 million, or 3 cents per share, compared with a profit of $775,000, or 2 cents per share.
Analysts polled by Thomson Reuters expected a loss of a penny per share. Estimates typically exclude one-time items.
Year-ago results included a $17 million gain from the January 2007 sale of its BridgeStreet Corporate Housing subsidiary.
Quarterly revenue declined 7% to $190 million from $204.8 million on a drop in management fee revenue and other revenue from managed properties.
Powell Industries Inc.
Energy equipment company Powell Industries Inc. (POWL) said Wednesday fiscal second-quarter profit more than doubled on strong demand for electrical power products.
Profit rose to $6 million, or 53 cents per share, from $2.3 million, or 20 cents per share, a year earlier.
That topped the 40-cent per share estimate from analysts polled by Thomson Reuters.
Sales rose to $160.3 million from $141.9 million, Powell said, as demand for electrical power products rose around 13% to $154.1 million during the quarter.
"We are pleased to report much improved results for the second quarter, where we continued to see strength in all of our major markets," said Chairman and Chief Executive Thomas W. Powell in a statement.
Powell also raised its full-year profit and sales outlook.
Cooper Tire & Rubber Co.
Cooper Tire & Rubber Co. (CTB) said Wednesday its first-quarter profit tumbled 92% as costs for rubber and other raw materials rose and North American consumers put off tire purchases.
Net income for the three months ended March 31 fell to $1.7 million, or 3 cents per share, compared with $20.8 million, or 33 cents per share, in the year-earlier quarter.
Analysts polled by Thomson Reuters expected, on average, earnings per share of 10 cents.
Revenue rose to $679.3 million from $670 million, slightly less than the $680.4 million analysts expected.
Tire sales in North America fell 3% and operating profit was about a third of what it was a year ago. This offset a 27% increase in international sales, which resulted from higher prices and greater production.
Cooper noted that sales of tires for economy passenger cars and light trucks declined the most in the North American market.
The company also said the weak dollar raised the cost of natural rubber and oil-derived materials and noted that products liability expense climbed $14 million.
Jack Henry & Associates Inc.
Shares of Jack Henry & Associates Inc. (JKHY), which provides computer systems to financial institutions, slid in premarket trading on Wednesday, after the company said fiscal third-quarter profit edged up 1%, missing analysts' expectations.
After the market closed on Tuesday, the Monett, Mo.-based company said profit for the quarter ended March 31 rose 1% to $26.6 million, or 30 cents per share, from $26.4 million, or 29 cents per share a year ago.
Analysts polled by Thomson Reuters, on average, predicted a profit of 33 cents per share.
Revenue rose 11% to $187.9 million from $168.9 million in the year-ago quarter.
The company said results were "slightly" below expectations, with shortfalls in license and hardware revenue.
"In contrast to the company's relatively positive tone during the quarter, Jack Henry & Associate's third-quarter results were soft relative to our and 'Street' expectations, as well as the company's internal expectations," wrote Oppenheimer & Co. analyst Glenn Greene in a note to investors on Tuesday. "While the revenue miss not surprisingly was attributable to weaker than anticipated hardware sales, the meaningful gross margin miss is more troubling."
He kept a "Perform" rating on the stock.
Shares fell $2.37, or 9%, to $24.02 during premarket electronic trading, after closing at $26.39 on Tuesday
Cox Radio Inc.
Cox Radio Inc. (CXR) said Wednesday its first-quarter profit slipped 5% as national and local ad revenue declined, but the results still managed to beat Wall Street's expectations.
Earnings dropped to $12.8 million, or 14 cents per share, compared with $13.5 million, or 14 cents per share, a year earlier.
Analysts expected net income of 12 cents per share, according to a Thomson Reuters poll.
The company had fewer shares outstanding in the 2008 first quarter.
For the period ended March 31, revenue fell 3% to $97.8 million from $100.8 million on weak performances from stations in Atlanta, Orlando, Miami, Tampa and Richmond.
The results topped analysts' estimate of $96.9 million.
Local revenue slipped to $68.8 million from $71.9 million, while national revenue dropped to $20.6 million from $21.4 million.
Internet and other nontraditional revenue climbed 12.5% during the quarter.
MedCath Corp.
Hospital operator MedCath Corp. (MDTH) late Tuesday said its fiscal second-quarter profit slipped as revenue declined due to the recapitalization of one hospital and the sale of another.
In the quarter ended March 31, MedCath earned $5.7 million, or 29 cents per share, compared with $6.3 million, or 29 cents per share, in the prior-year period.
Revenue fell 11.1% to $157.1 million from $176.6 million in the year-ago period.
Analysts polled by Thomson Reuters expected a profit of 28 cents per share on revenue of $163.7 million.
MedCath noted that during the quarter, it sold its Dayton Heart Hospital in Dayton, Ohio.
Additionally, during the fiscal 2007 fourth quarter, MedCath finished the recapitalization of Harlingen Medical Center, reducing its stake to a minority ownership.
In April, MedCath predicted that its second-quarter results would likely miss Wall Street estimates as a result of lower inpatient volumes and revenue per adjusted admission. At that time, the company projected earnings between 25 cents to 28 cents per share on revenue between $156.7 million to $157.3 million.
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