IMGCAP(1)]
Transaction processor Total System Services Inc., known as TSYS, is searching for growth opportunities from acquisitions and potential new contracts amid the loss of several large clients, according to the Columbus, Ga.-based company. TSYS "is focused on dealing with overcoming the large loss of several large clients … primarily to financial difficulties and credit issues with the banks," Philip Tomlinson, TSYS chairman and CEO, said Tuesday afternoon during a conference call with analysts. The loss of such clients as Washington Mutual Inc., Wachovia Corp., Charming Shoppes Inc. and the eventual loss of Bank of America Corp. "does create a big hole" for the company, he said. The number of accounts on file decreased 3.8%, to 342.1 million as of Sept. 30 from 355.5 million a year earlier. Overall, TSYS added 29.6 million accounts from internal growth and 25.7 million from new clients between September 2008 and 2009. It lost 31.3 million from purges and sales and 37.4 million from deconversions. TSYS's earnings results "were in line with expectations, except for accounts on file," says Darrin Peller, information technology and computer services analyst at Barclays Capital, the investment-banking division of England-based Barclays Bank PLC. The number of accounts on file is the "most important underlying driver of the business, and [the decrease] shows the market is still challenging," says Peller. TSYS has signed 21 letters of intent for new business and believes the associated accounts potentially could offset the company's recent losses, said Tomlinson. However, "the uncertainty in the market is inhibiting them from signing contracts," says Peller. Besides signing letters of intent, TSYS is pursuing acquisition opportunities "aggressively," according to the company. The processor accumulated $420.1 million in cash and cash equivalents as of Sept. 30. TSYS's cash and cash equivalents are "more than enough to make a nice-sized deal," says Peller. "The challenge is finding the right candidate."
