Processing for Internet banking contributed to better-than-expected earnings at Fiserv Inc. in the first quarter, but the company is proceeding cautiously into electronic commerce.

The data processor's Internet businesses, which involve sales of front-end Internet banking software and processing of online banking transactions, is generating revenue at an annual rate of $50 million this year, compared with about $15 million last year, said Leslie M. Muma, chairman, president, and chief executive officer of Fiserv in Brookfield, Wis.

"If you compared us to most of these little dot-com companies, we are bigger than most of them with just this little piece of Fiserv," Mr. Muma said. "It is getting big enough where we have to separate it and talk about it."

But Fiserv has not yet pursued opportunities in the wholesale electronic commerce market. With its large base of financial institution customers, plus their corporate and retail customers, Fiserv could be ideally positioned to develop online marketplaces similar to recent initiatives announced by Chase Manhattan Corp., Citigroup Inc., First Union Corp., and Wells Fargo & Co.

These banking companies and others have made splashy investments in electronic commerce companies, including Commerce One Inc., Ariba Inc., and Intelisys. All are vying for position in a market that Forrester Research has said will grow to $2.7 trillion in 2004, or 17% of all trade, compared with $406 billion this year.

Mr. Muma said the electronic commerce market is changing too rapidly to guarantee success. "The business case has not presented itself yet," he said.

Fiserv will not "tend to make radical investments in something our clients are not buying or that is not making money," he said. "We will watch it, and we will listen to our clients, and when the time is right to move into that we certainly will, and we will move with a vengeance."

Fiserv last week announced first-quarter revenues of $396.4 million, up nearly 18% from a year earlier. Its net income was $43.2 million, up 29%. And its earnings of 34 cents a share exceeded the consensus estimate by three cents - highly unusual, since Fiserv has not beaten Wall Street's estimate by any material amount since early 1997.

Stephen T. McClellan, a first vice president and stock analyst at Merrill Lynch & Co., called Fiserv's financial results "stunning." He raised his target price to $51 a share, from $48.

"This is the first time in 14 years of a virtually perfect 20% [earnings per share] growth record that the company surged way above its norm," he wrote in a research report.

Fiserv's stock had dropped to the mid-$20's in March because investors were concerned that banks - Fiserv's primary customers - would be negatively affected by rising interest rates. This concern was temporary, he wrote, and Fiserv's overall outlook now is "favorable." The stock was trading Monday morning at $45.625 a share.

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