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Wednesday, July 26, 2006

At Your Service

By William Trent, CFA of Stock Market Beat

Summary: Services are holding up fairly well in the current market.PPI data for telecom shows that recent mergers have resulted in a less hostile pricing environment:
Watch List News
National Geospatial-Intelligence Agency Awards $69 Million Contract over five years to Accenture for Human Capital Management.

Leading customer care and billing solutions provider CSG Systems (CSGS) reported an upside earnings surprise and promoted Mike Scott to executive vice president and chief operating officer.

Credit reporting agency Equifax (EFX) earned $69.6 million, or 53 cents per share, up 11 percent from $62.6 million, or 47 cents per share, during the same period a year ago. Excluding certain items, the company earned 51 cents per share. Sales rose 7 percent to $387.7 million from last year’s $363.4 million. Analysts were looking for earnings of 50 cents per share on sales of $388.4 million. Shares fell on concerns of slowing growth in the face of declining mortgage applications.

Fidelity National Information Services, Inc. (FIS), a leading global provider of technology services to financial institutions, announced financial results for the second quarter of 2006. Consolidated revenue increased to $1.02 billion, Net earnings increased to $66.0 million and Net earnings per diluted share was $0.34. “FIS generated another quarter of solid operating performance. Year-to- date pro forma revenue growth of 6.2% and EBITDA growth of 10.4% are in line with our original full year expectations,” stated FIS Chairman William P. Foley, II. “With strong sales growth in the first half of the year and the recent launch of our new item processing and BPO operation in Brazil, we are increasing our full year outlook to reflect pro forma revenue growth of 5% to 7% percent, EBITDA growth of 10% to 12% and cash earnings per diluted share of $2.06 to $2.12.”

Rent-A-Center, Inc. (RCII), the nation’s largest rent-to-own operator, announced a messy quarter but the stock rallied sharply on an increase to guidance. The Company reported total revenues for the quarter ended June 30, 2006 of $583.6 million, a $3.0 million increase from $580.6 million for the same period in the prior year. Reported net earnings for the quarter ended June 30, 2006 were $39.8 million, or $0.56 per diluted share, representing an increase of 7.7% from the $0.52 per diluted share, or net earnings of $39.6 million for the same period in the prior year, when excluding the benefit of the 2005 tax audit reserve credit. “Our second quarter same store sales continued a positive trend in 2006,” commented Mark E. Speese, the Company’s Chairman and Chief Executive Officer. “Our same store sales increased 1.1% for the quarter, which is primarily related to changes in our promotional activities as well as an increase in the number of units on rent,” Speese continued. “In addition, we believe our customer has adjusted to the current level of fuel costs. As a result of these factors, we are raising our fiscal 2006 guidance to $2.08 to $2.15 diluted earnings per share from $2.00 to $2.10,” Speese stated.

Other News
Standard & Poors downgraded Convergys (CVG) on fears that it will lose major customers.

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