Magazine article American Banker

Mixed Reports from Tech Firms as Consolidation Pinches Profits

Magazine article American Banker

Mixed Reports from Tech Firms as Consolidation Pinches Profits

Article excerpt

Publicly held financial technology companies generally reported higher quarterly earnings over the past week, although a few firms attributed a squeeze in profits to a shrinking banking industry. Alltel Corp. reported a 9.3% increase in earnings, although operating income from its information services division declined slightly.

The Little Rock-based telecommunications and computer services firm reported first-quarter net income of $78.6 million, or 41 cents per share compared with 38 cents a share in the year-earlier period. Alltel's profits were in line with Wall Street analysts' expectations, according to information published by First Call Corp.

Officials noted that quarterly operating income from the company's Alltel Information Services unit declined by 6% from the year-earlier period, to $27.5 million. Revenues at the unit increased, however, rising 9% from the first quarter 1994, to $218 million.

The division, formerly known as Systematics Information Services Inc., provides outsourcing services and software to banks, health care providers, and telecommunications companies.

"As expected, information services results reflect the effect of continued consolidation in the financial industry, as well as the uneven flow of new contracts," said chairman and chief executive Joe Ford. "The booking of new software sales was particularly light during the first quarter, which affected margins."

Another big bank systems outsourcing firm, Fiserv Inc., fared better in the quarter. The Milwaukee-based company reported that its first-quarter earnings totaled $10.4 million, a 20% increase from the year-earlier period. Earnings per share were 26 cents, an increase of 4 cents. Revenues increased 12%, to $152.6 million. Affiliated Computer Services Inc., a data processing and electronic funds transfer services company based in Dallas, reported a 40% increase in net income for its third fiscal quarter ended March 31, to $4. …

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