Fair Isaac 2Q/01

Fair, Isaac and Company reported Thursday that revenues for the third fiscal quarter ending June 30 were $84.2 million, up 11% from the same period last year. Net income rose 60% to $12.4 million, compared with $7.7 million, reported in the third quarter of last fiscal year. For the nine-month period ended June 30, revenues totaled $242.7 million and net income reached $31.8 million. Fair, Isaac has high hopes for its new methodology for decision modeling called ‘Strategy Science’. For complete details on fair, Isaac’s latest quarterly performance visit CardData ([www.carddata.com][1]).

[1]: http://www.carddata.com

Details

Loyalty Lawsuit

The Federal Court of Australia ordered Catuity to provide Welcome Real-time with an affidavit listing an estimate of sums received arising from making or selling, or offering to make or sell, point of sale terminals, chip cards or software for use in the Catuity system. Catuity says it did not seek a stay of the Orders because the Orders were substantially those proposed by Catuity. Besides the affidavit, the court ordered Catuity to pay Welcome’s legal costs and to hand over to its solicitors, for safekeeping and destruction, all ‘CIT/Transcard’ and Catuity devices in its possession in Australia as of yesterday. The Federal Court of Australia ruled in May against Catuity and its Australian subsidiaries, Chip Application Technologies and CIT Cards (Australia) in a lawsuit filed last year by Welcome Real-time. Welcome claimed in the Court case that Catuity and its Australian subsidiaries had infringed its smart card loyalty patent by operating the CiT Transcard system in Western Sydney from July 1997, and by offering to supply upgrades of the system since that time. Catuity said the judge stated clearly that ‘the product, the use of which would infringe the patent, must be a product which infringes all the essential integers of the patent.’ Prior to the Orders, Catuity made changes to its product and therefore the Catuity product no longer infringes the patent.Catuity says these changes have had no detrimental effect on either the performance or functionality of the system. Catuity says it can now continue to develop, market and sell its product in Australia and elsewhere. Catuity says since it is impractical to change the existing Transcard operations in Western Sydney, they have agreed with the major customers that the previously planned closure of Transcard will occur as soon as possible. (CF Library 5/18/01; 5/22/01; 6/19/01)

Details

ShopRite Terminals

Wakefern Food Corporation is installing more than 4,000 smart card-enabled Hypercom ‘ICE 6000’ card payment terminals across its ShopRite chain. The terminals are already installed and operating in more than 170 supermarkets. When the installation is completed, the high performance ICE terminals will handle up to 4 million consumer transactions every week. Hypercom’s ‘ICE 6000’ is specifically designed to meet the needs of the multi-lane payment terminal and systems market, which generally includes the top 100 US and selected global retailers, including supermarkets, department stores, chain drug stores, mass merchandisers and other retailers.

Details

2Q/01 Delinquency

Eleven of the nation’s top twelve issuers, with at least $10 billion in receivables, posted higher delinquency for 2Q/01 compared to last year’s second quarter. As a peer group, delinquency (30+ days) rose 8.5%, for an average 2Q/01 delinquency rate of 5.38%, according to CardData. Capital One was the only exception, experiencing an 8% decline over the past year. Among issuers reporting 30+ day delinquency, Providian reported the largest increase, rising more than 24% over the past twelve months. Overall, delinquency grew about half as much as charge-offs between 2Q/00 and 2Q/01. The disparity between charge-offs and delinquency is driven by the recent increase in personal bankruptcy filings this year in anticipation of new legislation which has revived the “bankruptcy out-of-the-blue” phenomenon. For complete details on each issuer’s track record visit CardData (www.carddata.com).

SECOND QUARTER DELINQUENCY
2Q/00 2Q/01 DAYS CHANGE
1. Citigroup: 1.26% 1.72% 90+ +36.5%
2. MBNA: 4.44% 4.57% 30+ + 2.9%
3. First USA: 3.83% 4.10% 30+ + 7.0%
4. Discover: 5.11% 5.84% 30+ +14.8%
5. Chase: 1.68% 1.90% 90+ +13.1%
6. AmEx: 2.40% 2.90% 30+ +20.8%
7. Capital One: 5.35% 4.92% 30+ – 8.0%
8. Providian: 6.48% 8.04% 30+ + 24.1%
9. BofA NR NR NA NA
10. Fleet: 4.38% 4.40% 30+ + 4.6%
11. Household 3.14% 3.60% 60+ +14.6%
12. Metris: 7.70% 8.30% 30+ + 7.8%
30+ day Avg*: 4.96% 5.38% +8.5%

*60+ day and 90+ day are not meaningful

SOURCE: CardData ([www.carddata.com][1])

[1]: http://www.carddata.com

Details

Digital Insight 2Q/01

Digital Insight Corp. announced solid results for the quarter ended June 30, 2001, demonstrating progress ahead of expectations on its path to profitability.

Revenues for the second quarter were $22.7 million, an increase of 104% from $11.1 million reported in the same period last year, and a sequential increase of 11% from the first quarter of 2001.

Pro forma net loss for the quarter excluding non-cash charges for stock- based compensation and amortization of goodwill and intangibles was $3.1 million, or ($0.10) per share based on 29.3 million weighted average common shares outstanding which exceeds the consensus forecast reported by First Call of ($0.11) per share. Pro forma net loss for the second quarter excluding non-cash charges for stock-based compensation, amortization of goodwill and intangibles, and restructuring charges improved 46% from $5.6 million in the first quarter of 2001. During the corresponding quarter in 2000, the pro forma net loss excluding non-cash charges for stock-based compensation, amortization of goodwill and intangibles was $5.0 million, or ($0.21) per share based on 23.4 million weighted average common shares outstanding.

Net loss for the quarter was $13.3 million or ($0.45) per share, compared to a net loss of $5.8 million, or ($0.25) per share, for the corresponding period in 2000.

For the six months ending June 30, 2001, revenues were $43.1 million, an increase of 117% from $19.9 million reported in the same period last year. Pro forma net loss for the six months ended June 30, 2001 excluding non-cash charges for stock-based compensation, amortization of goodwill and intangibles and restructuring charges was $8.7 million, or ($0.30) per share based on 29.1 million weighted average common shares outstanding. During the corresponding period in 2000 the pro forma net loss excluding non-cash charges for stock-based compensation, amortization of goodwill and intangibles, restructuring and merger-related charges, and the cumulative effect of the accounting change as a result of implementing SAB 101 was $12.9 million, or ($0.56) per share based on 23.1 million weighted average common shares outstanding. Net loss for the first six months was $33.3 million or ($1.14) per share, compared to a net loss of $29.2 million, or ($1.26) per share, for the corresponding period in 2000.

“We achieved record revenue, expanded margins from the prior quarter and continued to leverage operating expenses resulting in, as expected, a substantially narrowed pro forma net loss,” said John Dorman, chairman and CEO of Digital Insight. “We are particularly pleased with the improvement in gross margins this quarter, resulting from a favorable shift in our revenue mix and the positive impact of our activities initiated in the first quarter to restructure our lending operations. Our achievements this quarter position the Company to achieve EBITDA profitability next quarter and pro forma profitability in the fourth quarter of this year and beyond.”

Business Highlights

* New contracts signed during the quarter added approximately 1,100,000 potential end-users and 51 new financial institutions with 47 new Internet banking and 19 new cash management clients. Average potential end-users for the new Internet banking clients signed increased to about 23,000 from 18,000 in the prior quarter. Additionally, the Company cross-sold nearly $800,000 worth of additional services to existing customers during the quarter.

* There were 11,682 active cash management users at the end of the quarter, up 27% from the prior quarter and 211% from the prior year. During the quarter, 79 clients were implemented with the cash management service.

* The Company added 237,000 active end-users during the quarter. The number of active end-users at quarter end was impacted by the previously discussed acquisition of one financial institution, and another financial institution’s non-renewal of its service agreement. Net of this impact, active end-users increased 169,000 during the quarter to 1,977,000. Subsequent to the second quarter, the Company exceeded 2 million active end-users. Digital Insight is the first outsourced Internet banking service provider to exceed this milestone.

* The Company had a total of 888 Internet banking clients with “live” sites at June 30, 2001, with 100 going live during the quarter. Live Internet banking clients represented 23.8 million potential end-users and an overall penetration of 8.3%, up from 7.8% in the prior quarter. The total number of potential end-users of the 1,100 contracted Internet banking institutions was 27.0 million.

* Lending applications processed during the quarter totaled 87,338, a 31% increase over the seasonally low first quarter. Internet-based applications represented about 40% of the total applications processed, up from 35% in the first quarter. Coupled with the cost of restructuring actions taken in the first quarter, this helped to drive substantial improvement in the gross margin of the Lending Division, contributing to the overall strong margin performance of the Company.

* As part of the initiatives identified in the first quarter to improve the margins of the Lending Division, the Company has been actively managing its client base to optimize profit opportunities. As a result, during the quarter the Lending Division discontinued services to 20 customers that were determined to be below the scale, which can be served profitably.

* Bill payment users increased to nearly 197,000, up 19,000 or 11% sequentially. Bills paid increased to 2.3 million from 2.1 million in the prior quarter.

* Product platform migration to AXIS(TM) Internet Banking is progressing as planned with 58 live clients converted at quarter-end. In addition, over 100 AXIS Cash Management clients are utilizing Release 3.1 at the end of the quarter.

Year 2001 Business Outlook

The Company expects third quarter revenues in 2001 to be between $24.5 million and $25.0 million. The pro forma net loss per diluted share in the third quarter is expected to be between ($0.04) and ($0.05), excluding non-cash charges for stock-based compensation, amortization of goodwill and intangibles.

The Company expects full year 2001 revenues to be between $96.0 and $98.0 million with a net loss per diluted share for the full year expected to be between ($0.29) and ($0.30), excluding non-cash charges for stock-based compensation, amortization of goodwill and intangibles, and restructuring charges.

For complete details on Digital Insight’s 2Q performance visit CardData ([www.carddata.com][1]).

[1]: http://www.carddata.com

Details

WIRELESS SECURITY

Scotiabank’s e-commerce subsidiary e-Scotia and Diversinet Corp., a leading
provider of mobile commerce (m-commerce) security infrastructure solutions,
today announced an agreement for the incorporation of Diversinet’s advanced
wireless security products into e-Scotia’s managed security infrastructure.
The agreement grants e-Scotia a worldwide license to utilize Diversinet’s
Passport Certificate Server(R) and Passport Authorization Product(TM) for
e-Scotia customers requiring secure wireless e-commerce certification services.
e-Scotia will integrate Diversinet’s wireless security solutions into its
infrastructure in order to provide end-to-end wireless security services for
mobile commerce applications using wireless devices such as personal digital
assistants (PDAs), pagers, and smartphones.

“The incorporation of Divere-Scotia’s existing infrastructure enables e-Scotia
to deploy fully secure mobile financial service applications,” said Nagy
Moustafa, President and CEO, Diversinet Corp. “e-Scotia is respected globally
as a leader in e-commerce security solutions. The fact that they have chosen
Diversinet as their wireless security provider reinforces Diversinet’s leading
position in the wireless world.”

“We believe there is great potential for the future of m-commerce, and
Diversinet’s market leading security products will allow for the migration of
e-Scotia’s applications into a dynamic mobile world,” said Albert Wahbe,
Chairman and CEO of e-Scotia and Scotiabank’s Executive Vice-President
Electronic Banking.

e-Scotia’s new wireless security service offering will be available globally.
Enterprises and wireless high-value application developers now have a trusted
third party to provide the wireless identity authentication services required
in mobile financial applications.

About e-Scotia and Scotiabank

e-Scotia is the trade name for Scotiabank’s e-commerce subsidiary specializing
in e-commerce products, sales and services. Scotiabank is one of North
America’s premier financial institutions, with about $275 billion in assets and
approximately 52,000 employees worldwide, including affiliates. It is also
Canada’s most international bank with more than 2,000 branches and offices in
over 50 countries. Scotiabank is on the World Wide Web at www.scotiabank.com.

About Diversinet Corp.

Diversinet is enabling mobile e-commerce (m-commerce) services with its
wireless security infrastructure solutions. The company was confirmed by the
Yankee Group (reference; The Yankee Group Report Wireless/Mobile Technologies,
Vol. 1, No. 7, September 2000, by Emily Williams and David Berndt), as having
the leading product technology for the delivery of end-to-end wireless security
infrastructure solutions to wireless device makers, ASPs and operators,
application software developers and network infrastructure providers. For more
information on Diversinet, visit the company’s web site at www.dvnet.com.

Details

NextCard 2Q/01

Inching closer to profitability, Internet credit card pioneer NextCard reported a second quarter net loss of $14.4 million compared to a $16.6 million loss for the first quarter, and a $24.5 million loss for 2Q/00. The issuer, which recently crossed the one million account milestone, projected a 3Q/01 loss of about $7.5 million followed by a profit in the fourth quarter. NextCard’s acquisition cost per account in the second quarter was approximately $50, an improvement of 48% from the previous year, but up slightly from 1Q/01’s $49 rate. Total managed loans rose 115% to $1.789 billion as of June 30, compared to $829.7 million as of June 30, 2000, and increased 12% over the $1.595 billion in managed loans as of March 31, 2001. The net charge-off rate increased to 4.92% and the delinquency rate (30+ days) rose to 5.25%. NextCard implemented a new credit risk scorecard this year which has improved credit quality. During the second quarter, the Company also launched a new fee-based product, ‘NextCard Credit Expert’, developed in partnership with Experian. For complete details on NextCard’s current and past performance visit CardData ([www.carddata.com][1]).

NEXTCARD’S TRACK RECORD
2Q/01 1Q/01 4Q/00 3Q/00 2Q/00
Recv: $1.789b $1.595b $1.312b $1.093b $.8297b
Accts: 1016k 881k 708k 577k 443k
C-O: 4.92% 3.99% 3.10% 2.67% 2.21%
Del: 5.25% 4.75% 3.92% 3.30% 2.68%

Recv- receivables; Accts- accounts; C-O-charge-offs; Del- 30+ day delinquency
Source: CardData (www.carddata.com)

[1]: http://www.carddata.com/

Details

Diebold 2Q/01

Diebold yesterday reported 2Q net income of $34.3 million on revenue of $423.6 million. Diebold says total worldwide orders for product and service increased in the double-digit range. Significant orders for the second quarter included: a self-service contract totaling close to $20 million for a national financial institution in Brazil; an agreement with a major bank in China for ATMs, valued at approximately $5 million; ATM orders totaling more than $4 million for three financial institutions in the United Kingdom, France and Poland; nearly $2 million in electronic security and drive-up solutions for a major U.S.-based financial institution; and a franchise agreement with Uni-Marts, Inc., to place 240 cash dispensers under Diebold’s ATM Franchise Program. For complete details on Diebold’s current and past performance visit CardData ([www.carddata.com][1]).

[1]: http://www.carddata.com/

Details

AOL MovieFone

AOL Moviefone announced that its Web site, Moviefone.com, hosted an all-time high of more than 3 million unique users in June, according to Media Metrix. This record-breaking usage represents an 82 percent increase in traffic to the Web site over the past year, reinforcing the consumer demand for Moviefone’s comprehensive online movie information and ticketing services, and solidifying Moviefone’s position as the largest movie showtime and ticketing service online with more than five times the number of users than the next largest movie ticketing site.

AOL Moviefone also announced that it now offers advance ticket sales to more than 8,000 screens, more than doubling its previous offering. With this expansion, Moviefone.com now provides consumers with online access to tickets for more than 80 percent of North America’s movie screens that currently offer Internet ticketing capability, through the activation of its previously announced partnership with MovieTickets.com. Additionally, Moviefone.com now makes it easier for people to purchase tickets using AOL Quick Checkout and offers users one-click access to showtimes for their closest local theaters from the Moviefone.com home page.

Tommy McGloin, senior vice president and general manager at AOL Moviefone said, “Moviefone.com continues to strengthen its lead as the number one site for moviegoers across the country which is a testament to the ease-of-use of Moviefone’s offerings and the consumer demand for online movie information and ticketing services. These new enhancements further our goal at Moviefone of making a trip to the movies easier, more convenient and more enjoyable than ever before.”

Moviefone.com’s new features include:

Enhanced Ticketing

By purchasing their tickets online for one of the 8,000 movie screens for which Moviefone.com now offers advance sales, moviegoers can bypass the ticket lines and avoid the disappointment of a sold out show. Moviefone.com’s ticketing pages have also been redesigned to provide consumers with an easy, step-by-step process for building their ticket order, confirming their selections and making their purchase. Once they have completed their purchase, users can also get a map to the theater from Mapquest or a listing of nearby restaurants and bars from Digital City.

Personalization

Moviegoers will now find a convenient listing of their three closest theaters on the Moviefone.com home page and will have one-click access to showtimes for those theaters. In addition, to make their ticketing transactions faster and easier, Moviefone.com now offers AOL Quick Checkout. For users who sign up for Quick Checkout, Moviefone.com will remember their credit card information for future purchases.

Community Content

Moviefone.com has introduced new features to help moviegoers pick a movie and to create a community among its users. For example, on the Moviefone.com home page users can get a list of the top five most requested movies on Moviefone, giving them an up-to-the-minute sense of what movies people are interested in and one-click access to local showtimes for those movies. Also, Moviefone’s new “Critics’ Island” feature will help moviegoers pick a movie while also allowing them to interact with other Moviefone.com users. Moviefone.com has selected four regular moviegoers who see movies courtesy of Moviefone and submit their reviews for posting on the site. The rest of Moviefone.com’s users get to assess their reviews and vote to “Kick Off” or “Keep” each reviewer. Once a month the least popular reviewer will be kicked off the island and replaced with a new castaway.

About AOL Moviefone

AOL Moviefone, a wholly owned subsidiary of AOL Inc., is the leader in providing online, telephone and wireless movie listings, information, and ticketing to consumers anytime, anywhere. Through its online service Moviefone.com, its 777-FILM telephone service, and numerous wireless devices, including Sprint PCS phones, AT&T PocketNet, and Palm handheld computers, the company serves one in every five U.S. moviegoers each week with a complete, free directory of movies, showtimes, theater locations, the ability to purchase tickets, and other content of interest to moviegoers. AOL Moviefone is a part of the AOL Interactive Properties Group.

Details

Protection Deception

Unscrupulous telemarketers continue to peddle worthless credit card loss “protection,” and the Federal Trade Commission continues to work to stop them from doing so. In the latest action, announced Wednesday, the Commission has filed a stipulated final order for permanent injunction against Phoenix, Arizona-based Capital Card Services, Inc. (CCS) and its president Cory M. Harris. Under the terms of the order, the defendants will be prohibited from offering such “loss protection services” in the future and must post a $200,000 bond before engaging in any future telemarketing activities. The order is the result of a complaint brought against CCS and Harris as part of the Commission’s “Operation Protection Deception” law enforcement sweep announced last year.

According to the FTC’s complaint, CCS and Harris violated the FTC Act by selling what was purported to be credit card loss “protection” by: 1) claiming to be calling consumers from, or on the behalf of, their credit card issuers; 2) claiming that consumers could be held fully liable for all unauthorized charges made to their credit card accounts; and 3) falsely representing that the consumers had authorized the purchases for which they were charged. In addition, by making false statements to induce consumers to pay for goods and services in connection with the telemarketing of their credit card loss “protection” programs, the FTC alleged the defendants violated the FTC’s Telemarketing Sales Rule (TSR). In general, it is illegal to represent that any consumer is liable for unauthorized charges on his credit card in excess of the $50 limit set forth by federal regulations.

The final order announced today contains strong injunctive relief. The defendants are permanently banned from engaging in the sale of credit loss or “protection” services. To address the possibility of future law violations, the defendants are prohibited from the specific activities detailed in the Commission’s complaint, including: 1) representing that they are calling from, or on the behalf of, consumers’ credit card issuers; 2) that consumers could be held fully liable for all unauthorized charges made to their credit card accounts; and 3) that consumers had agreed to the purchases for which their accounts had been debited. The order also prohibits the defendants from failing to comply with the TSR. In addition, the order contains broad fencing-in provisions that prohibit misrepresentations about: 1) consumers’ credit-related rights or obligations under the law; 2) any facts that would be material to a consumer’s decision to purchase a good or service; and 3) installment payments for any product or service.

The order also prohibits the defendants from telemarketing any product or service without first posting a $200,000 bond to ensure that consumers would be protected from any future illegal activity. In addition, the order bars the defendants from distributing their customer list to anyone other than FTC or law enforcement personnel, unless ordered by a court to do so.

Finally, while neither CCS nor Harris currently has significant assets, the order contains a $2 million judgment against CCS to allow the FTC to attempt to collect on any corporate assets. The order requires Harris to pay the amount that he does have in a bank account – $4,790. The order also contains standard record-keeping, monitoring and compliance provisions.

The Commission vote to authorize staff to file the stipulated final judgment was 5-0. The stipulated final judgment was filed in the United States District Court in Phoenix, Arizona.

Details

Concord EFS 2Q/01

Concord EFS reported this morning second quarter net income of $71.2 million on revenue of $420.7 million compared to $338.8 million in the second quarter of 2000. Much of the revenue growth was driven by Concord’s Network Services segment, as the company expanded ‘STAR’ network participation and cross-sold processing to current clients. Revenue on the Payment Services side was driven by continuing payment mix shift to electronic alternatives, plus the addition of new merchants. For complete details on Concord’s current and past performance visit CardData ([www.carddata.com][1]).

[1]: http://www.carddata.com/

Details

2Q/01 Charge-Offs

All twelve of the nation’s top issuers, with at least $10 billion in receivables, posted higher charge-offs for 2Q/01 compared to last year’s second quarter. As a peer group, charge-offs rose 17.5%, for an average 2Q/01 charge-off rate of 6.32%, according to CardData. Providian and American Express led the group with the highest increase in losses, 38.7% and 29.5% respectively. Capital One and Bank of America reported only a slight increase in charge-offs. Losses for sub-prime specialists, Providian and Metris/Direct Merchants, exceeded 10% for the second quarter. The rise in charge-offs has been attributed to a surge in personal bankruptcy filings this year in anticipation of new legislation and to the softening economy. For complete details on each issuer’s track record visit CardData ([www.carddata.com][1]).

SECOND QUARTER CHARGE-OFFS
2Q/00 2Q/01 CHANGE
1. Citigroup: 4.32% 5.51% +27.5%
2. MBNA: 3.95% 4.82% +22.0%
3. First USA: 5.44% 6.09% +11.9%
4. Discover: 4.21% 4.98% +18.3%
5. Chase: 5.16% 5.54% + 7.4%
6. AmEx: 4.40% 5.70% +29.5%
7. Capital One: 3.97% 3.98% + 0.3%
8. Providian: 7.42% 10.29% +38.7%
9. BofA: 4.84% 4.94% + 2.1%
10. Fleet: 5.78% 6.31% + 9.2%
12. Household: 5.57% 6.82% +22.4%
13. Metris: 9.50% 10.90% +14.7%
AVERAGE: 5.38% 6.32% +17.5%
SOURCE: CardData (www.carddata.com)

[1]: http://www.carddata.com/

Details