Bisys Group Inc. seems committed to retaining its bank-outsourcing business after it restates historical earnings for a second time and settles mutual-fund issues with regulators, an analyst said Monday.
The New York company has hinted in the past it might consider selling its bank core-processing unit, the smallest of its three lines of business. But Carla N. Cooper, an analyst at the brokerage firm Robert W. Baird & Co., said Bisys might instead try to reinvigorate the business.
She pointed to an announcement last week of the formation of a new line of business, Bisys Corporate Financial Solutions, that will offer services in the health-care banking, corporate money market, retained-asset, and insured-deposit markets.
"It could refocus the bank unit," improving its growth prospects to make the business more attractive to the company's growth-oriented management, Ms. Cooper said.
David M. Scharf, an analyst at JMP Securities LLC of San Francisco, agreed that speculation about selling the bank unit "has come to a standstill" as executives concentrated on resolving its ongoing accounting investigation. "We haven't heard any news for a full six months" he said. In February, Bisys executives declined to address the question during an earnings conference call, which fueled speculation that it was considering a sale.
Bisys said Monday that it would restate earnings for the last three years and was negotiating with federal regulators to settle an inquiry.
The company said the restatements will reduce revenue and profit from before its fiscal 2004, which ended last June, and modestly increase them afterward.
The restatement would be its second in two years. Last June the company restated results going back to 2001 to correct its reporting on commissions in its life insurance business. That resulted in a $100 million downward adjustment.
The current issue involves fees that mutual funds paid to Bisys.
"We are committed to ensuring that this restatement will provide closure on these issues," said president and chief executive Russell P. Fradin in a press release.
Ms. Cooper said that the restatement could be a turning point. "This begins to enable them to put it behind them," Ms. Cooper said. "I think that's the hope - that this clears the deck." She rates the stock "neutral."
