An agreement that Fiserv Inc. recently signed with London-based Abbey National Bank PLC may help put the outsourcer on course to fulfilling its global ambitions.
Until the Abbey deal, signed at the end of last year, Fiserv had little to show for its aspiration to serve banks worldwide, a goal it first articulated in 1998 when it revised its mission statement.
Abbey, with $288 billion of assets, selected Fiserv as its primary processor for a separate, Internet-only bank it is planning. Fiserv officials did not provide details of the deal, citing confidentiality agreements.
Abbey National Bank "is our first win of that nature internationally, which is very important to us for the growth of the company," said Dean C. Schmelzer, executive vice president of Brookfield, Wis.-based Fiserv. "Our strategy is to go after large transactions and to be more aggressive on the mergers and acquisition side internationally," he added. "We will find partners to help us get into markets that we are not in today."
Fiserv produced $1.4 billion of revenues in 1999, up 18%. Seven percent of those revenues came from international operations.
Last week, the company held a two-day, international marketing summit in Milwaukee to evaluate "how we were presenting ourselves on a worldwide basis," said Fiserv spokesman Charles Doherty.
The answer was that the company lacked a unified approach to the market, particularly in sales to larger banks, Mr. Doherty said.
"We have always had a reputation for being a community bank processor and, for years, an S&L processing operation," he said.
That image is changing, he said. Bank of America Corp. last week licensed Fiserv's Return Item Control System to speed its handling of the 6,000 returned checks it receives daily. The Charlotte, N.C.-based money-center, which operates in 52 countries, also uses Fiserv's International Comprehensive Banking System for all its overseas processing.
"I think Fiserv is working its way up the food chain," said Andrew Jeffrey, an equity analyst at Robertson Stephens.
Mr. Jeffrey, who reiterated his "strong buy" rating, said Fiserv has relationships with 25% of financial institutions in the country, "which gives you a sense that its customer base spans the entire asset size continuum. I think Fiserv is indifferent to the size of its customers."
Fiserv on Tuesday reported fourth-quarter revenue of $374.5 million, up 10% from the same quarter a year earlier. Net income was $34.9 million, up 18%. The company earned 28 cents a share, a penny better than what Wall Street expected, according to First Call.
The company's stock closed Friday at $32.75. Adjusted for a stock split, the price fell 8%.
Using earnings results and his projections for accelerated earnings growth with the passing of year-2000 concerns, Mr. Jeffrey raised his 12-month stock price target to $60 a share.
He said Fiserv has a price-to-earnings multiple of 27, but deserves higher.
