Software and systems integration firm American Management Systems Inc. last week reported higher earnings and revenues for the third quarter, driven primarily by continued strong business growth from financial and telecommunicalions firms.
Officials at Fairfax, Va.-based AMS said earnings for the three months ended Sept. 30 hit $5.8 million. or 33 cents per common share. on revenues of $119.1 million. In the same period last year. the company reported a net profit $3.1 million, or 19 cents per share, on revenues of $89 million.
Paul A. Brands, chief executive officer of AMS, said the thirdquarter results were in line with the company's forecasts, as well as Wall Street analysts' earnings estimates that ranged between 30 to 34 cents per share.
He added the company's 33% revenue increase over was due chiefly to spirited improvements in business from financial institutions and telephone companies. "These sectors are similar in that both are actively seeking technology solutions that focus on better understanding their customers."
Third-quarter revenues from telecommunications firms rose a whopping 82% from the yearearlier period, from $18.8 million to $34.2 million. Business from financial institutions rose nearly as much. growing 78% over the third quarter of 1993. from $13.7 million to $24.3 million.
Mr. Brands pointed out that part of the big increase in revenues from financial institutions was due to the December 1993 acquisition of Vista Concepts Inc. a provider of trust accounting systems. "But even when you take out the revenues from Vista. our internal grow in the financial industry rose over 40%," he noted.
Peter F. DiGiamarrino, an AMS vice president in charge of financial sector business, said the industry's rising profitability was opening up bankers' purse strings after some tight budgets in the early 1990s. "We're seeing more enterprise-wide projects focused on defining the profitability of various customer segments that banks serve," he said, adding that the company started two such projects with large banks in the past quarter.
Mr. DiGiamarrino added that another trend was more banks moving to so-called "client-server computing," where networks of personal computers share processing tasks once relegated to mainframe.. "We just finished a project with Comerica Bank that was primarily a client-server installation," he said, adding that this technology is becoming a larger component of AMS's systems integration projects.
He also noted that an increasing part of AMS engagements with banks now include some form of management consulting, such as organization design and work flow analysis. "Bankers understand that reengineering isn't just putting in a new computer system, it also involves a lot of complex organizational issues we are helping them address."
Mr. Brands said he expects revenues from financial and telecommunications firms to become a larger part of AMS's business mix, which in the past had been more slanted to building systems for federal, state and local governments. He noted that revenue from Federal agencies was declining "mainly because there is not many contracts out where we think we can make money," although he was more optimstic about revenue growth from the state and local level.
