Fiserv (FISV) Q4 2008 earnings summary

Executive summary

• 2008 revenue rose 22% to $4.739B and operating income rose 20% to $890M, driven mainly by the CheckFree acquisition; continuing-operations income and diluted EPS declined.

• Disposals of Health, most ISS, and a 51% Insurance interest reshaped the portfolio; proceeds supported debt reduction, while Health and ISS sale gains lifted discontinued-operations income.

Financial highlights

• FY revenue was $4.739B, up 22% YoY; processing and services revenue rose to $3.616B from $2.668B, while product revenue fell to $1.123B from $1.229B.

• Operating income increased to $890M from $739M; operating margin eased to 18.8% from 19.0%.

• Continuing-operations income was $346M vs. $414M; net income was $569M vs. $439M and diluted EPS was $3.49 vs. $2.60, including discontinued-operations gains.

• Q4 revenue was $1.061B, operating income $219M, continuing-operations income $71M, net income $62M, and diluted EPS $0.39.

Outlook and guidance

• 2009 continuing-operations tax rate expected at 38.5%, compared with 45.1% in 2008; 2008 included a 6.9-point effect from the Insurance sale tax provision.

• 2009 outlook anticipated fewer account-processing switches among depository institutions and ongoing demand for deposit-gathering, efficiency, risk, and regulatory products.

• CheckFree integration targets included annual cost savings above $100M and annual revenue synergies above $125M over several years; realization and timing remained uncertain.