BUSINESSWEEK ONLINE : APRIL 28, 1997 ISSUE
INSIDE WALL STREET

When Insiders Bail Out

Insider selling can be hazardous to a stock. At Transaction Systems Architects (TSAI), the price suffered when initial venture-capital investors sold 800,000 shares in February--after the expiration of the three-year no-selling period. The stock tumbled from 46 to 26. Transaction Systems makes software to process transactions involving credit and debit cards, checks, and automated teller machines.

Its stock has edged up to 29 as buyers stepped in. The management team, however, didn't sell. In fact, some officers bought options for a further 1 million shares, vesting in four years. ''That indicates confidence in the business,'' notes Goldman Sachs analyst Gregory Gould.

Transaction is a direct beneficiary, he explains, of the shift toward electronic forms of commerce. It benefits from any electronic request for cash, whether it's from an ATM or a debit terminal. Gould says the company is a leader in a growth business: ATM transactions are expected to grow 15% to 20% worldwide over the next few years. The use of debit cards is expected to jump 30% to 50%, and credit cards about 155%, he notes.

Gould figures Transaction will earn 75 cents a share for the year ending Sept. 30, 1997, and 95 cents in 1998, vs. last year's 59 cents. His target for the price: 38 in a year, based on a 30% growth rate.


BY GENE G. MARCIAL

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