ADP Bags Merrill Quote Contract In Wake Of IMNET Collapse; 20,000 Terminals Would Make Adp Number One In U.S.

The Financial Information Services Division of Automatic Data Processing, Inc. is poised to become the number one quote vendor in the United States. Following the decline and fall of Imnet, Merrill Lynch bypassed its current vendor, Quotron Systems, Inc., and selected ADP-FIS to provide its next-generation financial information and branch automation system. The total value of the deal wasn't announced, but is estimated at $500-$600 million.

ADP is expected to install the first of an estimated 20,000 IBM-PC workstations at Merrill late this year, with the balance of the roll-out taking about 18-24 months. ADP officials decline to discuss contract terms, but sources say the deal is for seven years with a five-year renewal option.

When the passing of Imnet was announced, it was widely assumed that Merrill Lynch wouldn't take such a drastic step without having a solid back-up already in place. About a week later, rumors starting circulating that ADP had won the contract, and its stock price began to climb from 35 5/8 on January 2d to 42 on January 9th, when the Merrill deal was finally confirmed.

After Quotron's current pact with Merrill expires in late 1988, the new contract is likely to push ADP into the number one market share position. Merrill Lynch represents about 20,000 of Quotron's current 85,000 desk units. Adding these to ADP's 55,000 terminals would give ADP 75,000 -- a 54 per cent share -- and leave Quotron with 65,000, all else being equal. The significance lies not only in the absolute size of these numbers, but also in the fact that a little over a year ago, prior to the Bunker Ramo acquisition, ADP had fewer than 20,000 terminals installed.

What kind of system is Merrill Lynch buying? Final details haven't been worked out, says ADP, but apparently it will be a hybrid -- a cross between ADP's own IBM-based FS Partner and the defunct Imnet System 500. Although ADP is taking care to distance itself from any association with Imnet, sources say that as a condition of getting the business, ADP was required to purchase rights to Merrill's FSS software, which had formed the nucleus of the Imnet system.

The branch architecture will be ADP's, using a souped-up IBM-AT as a branch processor and IBM-XT family workstations. Whether the software will look more like ADP's FS Partner or more like Merrill's FSS remains to be seen. The network is also expected to retain some traces of Imnet, particularly its combination of satellite broadcast for market data delivery and SNA for terrestrial connectivity.

Imnet or no Imnet, IBM still gets to move a lot of hardware and Merrill Lynch still winds up with a system that embraces much of its wish list. Ironically, the deal also turns ADP-FIS predominantly into an IBM vendor. The company has been a Convergent Technologies booster, but now has only about 8,000 FS Plus NGen workstations in the field, with another 2,000 or so on order.