California-Based Online-Banking Program Maker's Stock Rises on Microsoft Deal
Posted on: Friday, 27 June 2003, 06:00 CDT
Jun. 27--CALABASAS, Calif.--Wall Street cheered Digital Insight Corp.'s new alliance with Microsoft Corp., driving the company's stock up 8 percent Wednesday.
Shares of the online banking programs developer closed at $17.25, up $1.33, following the announcement that it will co-market its open financial exchange software with Microsoft.
The two had worked together in the past to encourage Digital's banking customers to support Microsoft Money for online financial transactions, but the arrangements had proved unwieldy. Wednesday's deal allows banks to go directly through Digital, strengthening relationships on both sides.
"They're trying to get as many institutions as possible to sign up on Microsoft Money," said Michal Geller, Digital's senior products manager for Internet banking services. "Now, they get 1,624 institutions in one fell swoop. For them, that's a big deal, and for us, the product gets better and easier to implement."
Previously, a bank would have to sign two separate contracts with both Microsoft and Digital to allow users to use Money to manage accounts online. Though mainly a procedural shift, the deal has the larger benefit of solidifying Digital's partnership with the software giant. Geller said the two were currently discussing other ways to work together in the future, though no specifics had been settled upon.
The news came at a volatile time for Digital Insight's stock. It fell 8 percent on May 23 after President John Dorman's decision to step down, then rebounded, sharply fell again in early June, then rose steadily to its Wednesday close.
Though he didn't put all the weight of Wednesday's rise on the Microsoft announcement, analyst Andrew Jeffrey of the Menlo Park office of the brokerage Needham & Co. said the firm is on the right path.
"The business is actually doing better than I would have anticipated four to six months ago, which the stock reflects," Jeffrey said. "They continue to execute better than the competition."
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