Weak hardware revenue hurts Jack Henry 3rd-quarter results

MONETT, Mo.—Shares of Jack Henry & Associates Inc., which provides computer systems to financial institutions, slid in premarket trading on Wednesday, after the company said fiscal third-quarter profit edged up 1 percent, missing analysts' expectations.

After the market closed on Tuesday, the Monett, Mo.-based company said profit for the quarter ended March 31 rose 1 percent 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 Financial, on average, predicted a profit of 33 cents per share.

Revenue rose 11 percent 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 percent, to $24.02 during premarket electronic trading, after closing at $26.39 on Tuesday

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