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Fiserv reports revised Bank of America contract; cuts 2008 outlook

01 May 2008  |  6990 views  |  0 Stock market quotes

Bank of America has re-negotiated a payment processing contract with Fiserv's CheckFree subsidiary, leading the vendor to cut its 2008 forecast.

Rumours surfaced last year that CheckFree could lose a major part of a lucrative e-bill payment processing contract with Bank of America, which was originally signed in December 2003. It was thought the bank was looking to shift some of its online bill payments to an in-house system.

Fiserv says CheckFree will continue to provide Bank of America with online consumer bill payment services through to 2013 under an "amended agreement".

The vendor says the contract now includes "higher technology and customer support levels" but has not disclosed specific terms of the new deal.

However Fiserv has revised its 2008 revenues and earnings guidance to reflect the new terms.

Fiserv president and CEO Jeffery Yabuki, told Reuters reporters that Bank of America received a one-time discount for services and the new contract pricing will decrease 2008 revenue by around $25 million.

Yabuki said that contract extension will cut Fiserv's 2008 earnings by around nine cents per share.

In its first quarter results statement, Fiserv says it now expects full-year 2008 adjusted earnings from continuing operations to be between $3.28 to $3.40 per share, compared to previous forecasts of $3.33 to $3.47 per share.

However Fiserv is reporting a hefty rise in first quarter profit after booking gains from sales of assets.

First quarter net income rose to $329 million, or $1.99 per share, from $114 million, or 66 cents per share, a year ago. Earnings were boosted by $1.40 per share from gains on asset sales. Fiserv completed the sale of its health units in February and also off-loaded part of its investment support services to TD Ameritrade in February.

Group revenue increased 39% to $1.31 billion for the first quarter of 2008 compared with $944 million in 2007. Processing and services revenue rose to $947 million in the first quarter, from $646 a year ago.

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