Fiserv Inc. this week is expected to announce the results of a long-awaited strategic review that its chief executive has said could lead to a significant shift in direction for the banking technology and outsourcing provider.
Jeffery W. Yabuki, named the Brookfield, Wis., company's president and CEO in November, has said little since then about his long-term plan. He gave some hints in April during his first earnings call, when he said he had ordered the review and that he would consider changing Fiserv's well-known policy of letting acquired companies operate independently.
The company was mum on its plans last week as executives prepared for its investor-day presentation Tuesday in New York, but several analysts said the market's expectations were high.
Though Mr. Yabuki said earlier that Fiserv might centralize some functions that are duplicated throughout its many business units, as well as cut nonpersonnel expenses and pursue more cross-sales, analysts said they doubted it would try to upend its corporate culture or launch any transformative initiatives.
Several said that Fiserv, the nation's largest banking vendor, would discuss plans to streamline its corporate structure and give some insight into its future growth plans during Tuesday's presentation. Almost certainly it will detail plans to boost internal growth and reduce overhead costs, and it will probably discuss a more aggressive plan for mergers and acquisitions, likely focusing on such fast-growing areas as payments and health care.
John Kraft, an analyst at D.A. Davidson & Co., said Fiserv's structure might be resistant to an overhaul. The company has made 140 acquisitions since its founding in 1984, but because of the independence it gives those businesses, there has been little collaboration between similar units.
"Fiserv has lots and lots of great products that haven't played well together," Mr. Kraft said.
If it did attempt to consolidate certain units or to combine companies that offer similar products, it could cause an exodus of key executives upset about losing autonomy. Even worse, such consolidation could prompt Fiserv to drop some product lines, which might spur customer defections, Mr. Kraft said.
Fiserv's shares have been climbing in recent weeks and hit a 52-week high of $47.49 Friday morning. The stock closed Friday at $46.80, up 0.41%.
Melanie Tolley, Fiserv's vice president of corporate communications, said the company knew of no specific reason for the price move, "but we're happy about it."
Prudential Equity Group LLC upgraded the stock to "overweight" from "underweight" on Sept. 7. In his note accompanying the upgrade, Prudential analyst Brian C. Keane said Fiserv would begin to show improved results over the next 18 months, including better operating margins from the anticipated streamlining, and "a core focus on faster-growing segments like payments."
Mr. Keane also said the company could take advantage of its strong balance sheet for more aggressive stock buybacks and high-growth acquisitions.
On Sept. 4 Fiserv was downgraded by Goldman Sachs & Co. to "hold" from "buy." Goldman analyst Julio C. Quinteros Jr. said his company's ratings distribution guidelines call for no more than 25% of covered stocks to be rated "buy," but he wrote in a note to clients that "our bias on the shares remains positive, and this rating change does not reflect any fundamental concerns."
The chief concern may be investor expectations. Gregory Smith, an analyst at Merrill Lynch & Co. Inc., cautioned in a note issued Friday that "given the recent share price strength, we think a lack of any major new announcements could cause some modest disappointment."
In the meantime, Fiserv continues to buy. On Wednesday it announced it had acquired InsureWorx of Oakland, Calif., a developer of software for workers' compensation, commercial property and casualty, and risk administration organizations. InsureWorx had revenue of $43 million last year.
A Fiserv spokesman would not comment on speculation that it is a front-runner in a much larger deal, for the British core-processing software developer Misys PLC. Reuters reported on Sept. 4 that Fiserv and the privately held SunGard Data Systems Inc. of Wayne, Pa., were vying for Misys, which said in July that it had been approached by suitors it did not name.
Misys said on Tuesday that its independent committee "has not yet received any proposals, which it considers should be put to shareholders, although discussions with various of these parties are continuing." Reuters and others reported Tuesday that SunGard was dropping its bid.
Misys would be much larger than the typical Fiserv acquisition. Misys serves 1,200 banks in 120 countries, and reported revenue of $1.8 billion in the year that ended May 31; Fiserv had 2005 revenue of $4.1 billion.
Mr. Kraft said he was skeptical that Fiserv would attempt to buy an outfit as big as Misys, though he noted that increased consolidation among vendors has changed the dynamics of the market. "Acquisitions are harder and harder to come by," he said, noting Fiserv's recent focus on insurance and health care. "Maybe they're going to have to expand internationally."
