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The economic slowdown has prompted Total System Services Inc., known as TSYS, to reduce its guidance for 2009 and to sell its TSYS Debt Management subsidiary so it can focus on bolstering its payments business, according to the Columbus, Ga.-based payment processor. The company now expects 2009 revenues to decline by up to 5% and net income to drop by as much as 13%. It previously predicted revenue this year could increase by up to 2% and that net income could fall by up to 3% or stay flat. "We are very disappointed about the guidance, but we felt it necessary in the light of the continued deterioration of the card-issuing business and just the economy in general," Philip Tomlinson, TSYS chairman and CEO, said during a conference call with analysts late Tuesday afternoon. TSYS says it has signed a letter of intent with a potential buyer for its Debt Management unit, which handles collection and bankruptcy processing. The company is selling the unit because it no longer is core to its business, and it has a large amount of reimbursable revenues and a low operating margin, according to TSYS, which did not include the unit's revenues or expenses in its first-quarter earnings report. TSYS is "focused on growing revenue and reducing expenses," said Tomlinson, adding the company is "not happy" with its current position. Wayne Johnson, managing director and transaction processing equity analyst with Raymond James & Associates Inc., a St. Petersburg, Fla.-based financial-services holding company, says TSYS is self-correcting on an expense basis, but the next step is self-correcting its top line. "The former is easier to control than the latter," he says. "Once they are able to stabilize the top line, they will be in good shape again."
