If I read one more account of banks failing to get out from under the banking crunch, I think I'll revert to the First Local Mattress at Home. Bank tech is my business so here's what I see for the Big Three.FIS
Bill Foley deserves a nice rest, as long as he doesn't turn off his brain. Buying 15 companies in six years takes lots of money and lots of spreadsheets, but he did it, and at least from where I sit, without defaults. I'm a little careful about "batting a thousand" because a few years ago, Ken Jensen, former Fiserv CFO, elbowed me in the ribs in a room full of high-bonus investment bankers when I said Fiserv had a perfect record of acquisitions. Ken said one was sour. Integrating the solutions of 15 companies is a nightmare for FIS's technical staff, and keeping them as stand-alones is a quarterly nightmare for the CFO as he reports their drain on earnings. FIS will be one very busy company doing overhead work (integrating) while trying to sell more than the two parts sold last year. So I see a revenue projection of $5.4 billion, if you add the full year 2009 revenues of FIS and Metavante including modest growth. In the near term, I don't believe 1 + 1 will generate a lot more revenue than two ones.
Fiserv put the cap on its historic record of stability about a year ago, reaching what I believe is every solution for every financial institution with every banker's dream for support service. But now Fiserv needs better sales performance. In my opinion, CheckFree wasn't that near-term answer because banks are not buying electronic payments solutions fast enough. A 1.9 percent organic growth rate for Fiserv is like telling an investment banker he got a 1.9 percent raise with no bonus. They aren't accustomed to that kind of poverty. But stockholders should be happy. They got a 36 percent raise. Fiserv knows its business and the business of its customers. Fiserv doesn't make big mistakes. It serves the welfare of its customers and employees in that order, and doesn't get sidetracked by Wall Street. What Fiserv can't do is solve the banking industry's problems, and you didn't have to hear that from me. For now, steady as she goes is something to be grateful for. Revenue should come in at $4.8 billion.
I know two companies that won't like this paragraph. JHA is my idea of the perfect bank tech company. One guy created the mold 33 years ago out of tungsten steel, and no one could break it, nor would they want to. I never attended any vendors' board meetings, but I imagine if I was ever the proverbial fly on the wall at a JHA board meeting, the loudest sound might be the background music of "Home On The Range." Seldom will you hear a discouraging word and skies aren't cloudy all day at this peaceful campus in Monett. But in the competitive marketplace, JHA wins like a true champion with the goods, not the giveaways. I see lots of reasons why JHA will continue to be the group's leader in organic revenue growth rate so $810 million is a sound guess for 2009. Since $1 billion is the entry level of legitimacy in the Big Three, there's one acquisition out there that can do it. But that's like telling Janet to change the boardroom music to classical. Just as you don't tug on Superman's cape, you don't tell JHA how to run their business. And that's a good thing. McKinsey wouldn't last ten minutes.
It's a nice warm and fuzzy feeling to know that in the midst of calamity and chaos, there are some businesses that will do their job so bankers can at least put one piece of their concerns to rest.