Science Applications International Corp., a company better known in defense and intelligence circles, is poised to raise its banking industry profile by acquiring Broadway & Seymour Inc.'s banking software business.
The $4.7 billion consulting firm began to make a banking name for itself as a participant in the credit card industry's SET, or Secure Electronic Transaction, Internet security project. An information-security subsidiary, Global Integrity Corp., works for seven of the 10 largest world banks.
Beyond that "we had no name recognition nor domain expertise in financial services," said John A. Kelly, senior vice president of Science Applications' financial services practice. That unit will be moved from Atlanta to Charlotte, N.C., taking over Broadway & Seymour's headquarters.
Science Applications announced its agreement to acquire those operations last week. Terms were not disclosed.
The company will use Broadway & Seymour's brand name and take over the 70 financial-institution clients, including Chase Manhattan Corp. and Dime Savings Bank, that use the Touchpoint customer relationship management software, Crisp lending software, or BancStar branch automation software.
The name of the old Broadway & Seymour will be changed to Elite Information Group Inc. Based in Los Angeles, it will focus on time management software for the legal and professional services industries.
Alan C. Stanford, Broadway & Seymour's chairman and chief executive officer, will resign. Christopher K. Poole, the current president of Elite, will become CEO. The changes are subject to shareholder approval of the deal, expected within two months.
The financial services business was a drag on Broadway & Seymour's earnings in fiscal 1998, posting an operating loss of $11 million, compared with operating income of $5.9 million in 1997. The Elite unit, in contrast, reported 1998 revenue of $41.7 million and operating income of $3.2 million.
As a whole, Broadway & Seymour lost $7.6 million on revenue of $69 million in 1998, after earning $2.9 million on $79.6 million a year earlier.
By buying an established vendor, Science Applications can avoid some of the capital investments and "painful growth process" that would have been necessary to expand, Mr. Kelly said. Broadway & Seymour "was somewhat in financial trouble," he said, "but it had reinvented itself in the past 18 months (and) had a leading technology base and good name recognition."
All of this met Science Applications' criteria for growth in financial services, one of the vertical markets on which it focuses. The others are telecommunications, transportation, health care, and energy and utilities.
The acquisition of the regional Bell companies' Bellcore research venture two years ago made Science Applications a "major player in telecommunications," said Lawrence Peck, executive vice president of the company.
Science Applications is owned by its 35,000 employees and has posted 500% growth in the last five years.
Broadway & Seymour's financial division will get "the global reach and financial clout" it had lacked, Mr. Stanford said.
Michael Maoz, a senior research analyst at GartnerGroup, said Broadway & Seymour "didn't have much in the way of sales and support, but it had more domain expertise than anyone I saw."
