SunGard is warning that the terrorist attacks of 11 September have impacted all sectors of its business and will dent third quarter results and its outlook for full-year 2001.
SunGard says that revenues have been hit across the board, including software licenses, disruption to professional services contracts and trading activity. For the third quarter, SunGard expects its earnings per share to be in the range of $0.21 to $0.22, as compared to expectations of $0.25 per share.
While SunGard Business Continuity & Internet Services (BCIS) responded to 30 declared emergencies, fees related to these activities are not expected to have a material impact on overall financial results. The BCIS business model relies on monthly recurring revenue under multi-year contracts. Disaster declaration and daily usage fees paid by customers experiencing a disaster are not material and tend to offset the additional expenses incurred by the company during disaster support.
Cristóbal Conde, president and chief operating officer, says that the fundamental drivers powering the business remain strong.
"Despite a temporary setback in revenues, we believe that in the long run these events will generate further demand for our technology services," he says. "Clients will seek further assistance in developing more comprehensive, more complex disaster recovery and network contingency plans. The move from 48-hour recovery to always-on high availability solutions can only accelerate."
Conde believes financial institutions will view more favourably the type of outsourced and ASP solutions with built-in redundancy and business continuity that SunGard offers.
"In addition, it is now clear that straight-through processing not only reduces costs and errors, but also is far more resilient than manual processes," he adds.