SunGard Data Systems credited an increase in technology outsourcing among financial institutions for its strong fourth-quarter earnings.
The information technology and electronic processing company in Wayne, Pa., last week reported an increase in net income, excluding one-time merger fees, of 29%, to $221.5 million for the year. Fourth-quarter net income, excluding one-time merger fees, grew 37%, to $65.6 million.
SunGard processes three million trades a day, routing almost 70% of Nasdaq trade orders and managing more than $11 trillion of investment assets. The recurring revenue stream from these activities supplies much of the firms earnings. Revenue for the year was $1.6 billion, compared with $1.3 billion the year earlier; recurring revenue constituted 84% of revenue in the fourth quarter.
Norman Jaffe, a managing director at Fox-Pitt, Kelton, said, The trend toward outsourcing is a favorable trend over a multiyear period, and SunGard is very well positioned to provide their client base with the heavy lifting needed to stay competitive.
James L. Mann, SunGards chairman and chief executive officer, predicted that the company would increase its net income per share by 17% to 20% this year and that revenue would continue to grow 12% to 15% per year.