Wednesday, January 20, 2010

Earnings Roundup- Some Caution Voiced

Just quickly going through after-the-bell earnings and spotted the result from business services (they handle credit card and bank transactions) company Total System Services. What jumped out at me was their 2010 outlook

TSYS’ guidance for 2010 includes the impact of deconverted portfolios (whether as the result of bank failures, portfolio sales or otherwise), price compression, reduction in one-time termination fees and currency impact, and the current economic environment of the credit card market.

2010 Guidance

Total revenues $1,616 to $1,648 (4 %) to (2 %)

Reimbursable items $279 to $284 3 % to 5 %

Revenues before reimbursable items $1,337 to $1,364 (6 %) to (4 %)

Income from continuing operations $187 to $191 (15 %) to (13 %)

EPS from continuing operations $0.95 to $0.97 (15 %) to (14 %)

Average Shares Outstanding 197.7

“While 2010 is going to be a challenging year, we will continue to work aggressively to reduce our costs, including reducing staff, while expanding internationally and maintaining our technological advantage in the market place. We have an experienced and talented team at TSYS who will successfully execute our strategy to return growth to our business. In addition, with our strong balance sheet and cash flow, we will continue to aggressively pursue strategic acquisitions that diversify us and expand our presence in the payments processing business,” said Philip W. Tomlinson, chairman of the board and chief executive officer of TSYS.

I'll have to listen to the call to get a little clearer picture, but this is an industry that I was looking at quite favorably.  The revenue estimates were only lower by 2 to 4%, but they are clearly a bit skeptical, and keep in mind we're looking at estimates compared to the abysmal 2009.  I've always liked Fiserv as the best of breed in this industry, but its important to keep up with what competitors have going.
I'll monitor this situation some more, and definitely pay attention when FISV reports.  If I remember right, TSS was having problems a couple of quarters ago when others were a bit stronger.
Disclosure: None

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