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SunGard Q3 reflects economic slowdown

28 October 2010  |  3672 views  |  0 Source: SunGard

SunGard, one of the world's leading software and technology services companies, today reported results for the third quarter ended September 30, 2010.

For the quarter, revenue was $1.24 billion, down 7% year over year. Adjusted EBITDA was $338 million, down 10%, and adjusted income from operations was $251 million, down 16%. Excluding the results of one of our trading systems businesses, a broker/dealer, revenue was down 2%. Adjusted EBITDA and adjusted income from operations are defined in Notes 1 and 2 in the Notes attached to this release.

For the third quarter, the Company reported a loss from operations of $219 million, including a $328 million noncash write-down of goodwill which represents approximately 5% of our total goodwill balance, compared to reported income from operations of $132 million in the third quarter of 2009 which had no such write-down of goodwill. Reported results in both periods include amortization of acquired intangible assets, stock-based compensation, purchase accounting adjustments, and other expenses which are excluded from adjusted income from operations.

Organic revenue (defined as revenue from businesses owned for at least one year and adjusted for both businesses sold in the previous twelve months and the impact of currency exchange rates) was down 6% in the third quarter. Excluding the results of the broker/dealer business mentioned above, organic revenue was flat year over year. This broker/dealer revenue was down 67% compared to the prior year due primarily to the industry-wide dynamic by which active trading firms are opting to become broker/dealers and trade on their own behalf. See Note 3 in the Notes attached to this release.

Cristóbal Conde, president and chief executive officer, commented, "In the quarter, we continued to see solid organic revenue growth in our FS business excluding one of our broker/dealer businesses. While the business outlook showed signs of improvement in the first half of the year, our customers are still cautious about the outlook and are focused on reducing the costs of their core platforms and capturing more value from their existing sy existing sye from their existing systems. Our industry knowledge, services-led approach to creating value for our customers, and mission-critical software are helping to differentiate us in a very challenging environment."

For the nine months ended September 30, 2010, revenue decreased 6% to $3.79 billion. Adjusted EBITDA was $994 million and adjusted income from operations was $737 million. The Company reported a loss from operations of $19 million, including the $328 million noncash write-down of goodwill, compared to reported income from operations of $366 million for the prior period which had no such write-down of goodwill. Excluding the broker/dealer business mentioned above, revenue was up 2% compared to the first nine months of 2009.

Financial Systems revenue decreased 9% to $659 million in the third quarter. Organic revenue decreased 8%. Excluding the broker/dealer business mentioned above, revenue was up 2% and organic revenue was up 3%. License fees were $33 million, a decrease of $5 million compared to the third quarter of 2009.

Notable deals in the quarter included the following:

* A global capital markets firm selected SunGard's solutions for securities processing including Clearvision, Fame, GMI, Phase3 and Stream.
* One of the world's largest equipment rental companies selected SunGard's AvantGard to help automate its order-to-cash operations.
* A leading global financial services firm selected SunGard's WealthStation to help it meet new regulatory and reporting requirements.

Higher Education revenue decreased 3% to $121 million in the third quarter. License fees were $7 million, a decrease of $1 million compared to the third quarter of 2009.

Notable deals in the quarter included the following:

* A public doctoral/research university in Indiana selected SunGard's Banner Digital Campus and hosting services.
* A community and technical college system in Louisiana selected SunGard's Banner Digital Campus and technology outsourcing.
* A private university in Maine extended its relationship with SunGard to manage its information technology.

Public Sector revenue decreased 7% to $96 million in the third quarter. License fees were $4 million, a decrease of $2 million compared to the third quarter of 2009.

Notable deals in the quarter included the following:

* A school district in Ohio selected SunGard's student information management system as well as finance and human resources solutions.
* A public body in the UK that provides national services to support frontline policing renewed a support contract with SunGard for case preparation and custody services.
* A borough council in the UK extended a contract with SunGard to provide managed services for information and communications technology.

Availability Services revenue decreased 5% to $366 million in the third quarter.

Notable deals in the quarter included the following:

* A leading provider of integrated payment solutions, marketing services and security selected SunGard for advanced recovery services.
* A biopharmaceutical company selected SunGard for co-location and recovery services.
* A Canadian financial services organization extended its relationship with SunGard to include managed recovery services.

Financial Position

At September 30, 2010, total debt was $8.3 billion and cash balances were $787 million. During the nine months ended September 30, 2010, the Company generated $433 million in cash flow from operations, invested $223 million in capital expenditures, and spent $62 million on acquisitions net of acquired cash.

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