Magazine article American Banker

Outgoing Bisys CEO Sees Profit Rebound in 2005

Magazine article American Banker

Outgoing Bisys CEO Sees Profit Rebound in 2005

Article excerpt

The new chief executive officer at the financial services outsource provider Bisys Group Inc. will inherit a company that is struggling to right itself after earnings shortfalls in key business segments.

Dennis R. Sheehan, the current president and CEO, presided Thursday over his last quarterly conference call. "We remain enthusiastic about the growth potential of all our businesses," he said.

Mr. Sheehan predicted that the New York company's financial performance will improve and that earnings growth will return in 2005.

After nine years at Bisys, Mr. Sheehan will step down as CEO on Feb. 2, for health reasons, which he said were related to an accident. He announced his departure in October, saying he would stay on until a successor was named.

The successor was named Tuesday: Russell P. Fradin, formerly of Automatic Data Processing Inc. He will hold the titles of president and chief executive and have a seat on the company's board.

Mr. Fradin, who is to join Bisys on Feb. 2, was not involved in last week's earnings report, and a spokesman said he was not available to discuss his plans for the company.

For its fiscal second quarter, which ended Dec. 31, Bisys reported that net income fell 30%, to $20 million, or 17 cents a share, year over year. Revenue rose 13%, to a record $263.3 million.

Excluding restructuring charges of $1.4 million, or 1 cent per share, the pro forma net income of 18 cents was in line with analysts' average estimate.

Within its information services business, which includes core processing and other outsourced services for banks, Bisys' second-quarter revenue rose 8%, to $56.7 million, and operating earnings rose 7%, to $14.8 million.

Revenues also grew at other business segments, but operating results fell in investment services -- which includes record keeping for mutual funds, retirement plans, and similar businesses -- and the insurance and education services unit, which has had sluggish sales. When Bisys warned last September that its first-quarter results would fall short of expectations, it said weakness in the insurance area was the main reason.

Mr. Sheehan said Bisys has reorganized its insurance sales and marketing to rebuild that business, and noted that the 14% decline in operating earnings for the unit -- to $14. …

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