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After a rough start to the year in January, business at Metavante Technologies Inc. strengthened later in the quarter, as higher transaction-processing activity offset lower software-license revenue and the company cut costs, executives said today. The Milwaukee-based vendor says it had 15% earnings growth on 1% growth in sales during the first quarter ended March 31, in what may be its last earnings report before its planned acquisition by a larger rival, Fidelity National Information Services Inc. of Jacksonville, Fla. The companies expect to close that deal in the third quarter. Michael D. Hayford, Metavante president and chief operating officer, said the company's customers are weathering the financial crisis fairly well. "In community and regional banks, we continue to see the fundamentals of their business have held up pretty well. They haven't been hit quite as bad on the balance sheet, and so they have continued to spend," Hayford said during a conference call with analysts. "We continue to see the commitment on the banks to go forward with those projects." Net income grew 15%, to $40.3 million from $35 million in the first quarter of 2008. Revenue grew 0.5%, to $426.9 million from $424.6 million. David Koning, an analyst at Robert W. Baird & Co., said the results were solid, but he cautioned against reading too much into the health of banks from the results of Metavante or other large core processing vendors. "They all have pretty stable revenue streams. A lot of banks just pay a monthly bill," says Koning, who rates both Metavante and Fidelity shares at "outperform." "When things are better at banks, they probably spend a little more at the margins."
