Paychex Says Earnings Rise 12% But Cuts Guidance

Paychex, a payroll service company, said on Wednesday that quarterly earnings rose 12%, helped by higher revenue from its payroll and human resources services.

The Rochester, N.Y.-based company said earnings for its fiscal first quarter ended August 31 were $151.1 million, or 40 cents a share, compared with $135.1 million, or 35 cents a share a year earlier.

Shares initially rose more than 3% in extended trading, but dipped after the company lowered its earnings guidance for fiscal 2008 to reflect lower investment income resulting from its stock repurchase program and the recent cut in the federal funds rate.

The company said it now expects net income to increase between 12% and 14%, compared with its previous estimate of 18% to 20%.

The company still expects revenue to rise 11% to 13% in 2008.