Outlook for Financial Processing Companies Discussed in Wall Street Transcript Business Services Report
http://biz.yahoo.com/twst/080904/zgw802.html?.v=1

Excerpts:
TWST: What are you telling investors to do at this point?
Mr. Kraft: I think the smart investors are dipping their toes into the market and looking for neglected stocks. I think if you are looking for a quick turnaround, this is probably not the place for you. But if you are going to be in the market for a year or more, I think you will find broadly that there are some good values. As we see money flowing into the space, there will probably be a flight to quality of some sort, and you will probably see investors choosing the more secure names. I think you will find the data processors such as Fiserv (FISV) and Jack Henry (JKHY), two leaders in this space, do well in this scenario.
TWST: Why Fiserv?
Mr. Kraft: Fiserv is the biggest, the industry leader, and it is in the process of undergoing some major strategic and internal changes that will help improve their organic growth rates and improve their margins. The company is doing some things internally to boost their growth relative to their peers.
TWST: Why did they need to make these internal changes?
Mr. Kraft: Organic growth is very important to this industry. It's a consolidating industry; there have been a lot of acquisitions. So investors really value that organic growth. The organic growth of Fiserv has slowed. One of their historical practices has been that when they make an acquisition, they leave the acquired company alone. That presents a low risk strategy at the time, but the lack of integration makes cross-selling a bit more difficult in the future.
One of the things Fiserv is doing is integrating their broad base of acquired companies. This allows for a more integrated suite of products, which helps their sales folks cross-sell goods and services. That's one thing that they are doing that should help boost growth. They have also divested some large chunks of their business, some non-core areas such as health care and insurance. Meanwhile, they've acquired some core bank technology, faster growing services, namely CheckFree, the leading Internet bill pay vendor. Simply put, these efforts should boost organic growth rates.
TWST: The other name is Jack Henry. What's the story there?
Mr. Kraft: Jack Henry is not undergoing particular internal changes, but they are really the premier vendor in this space. Certainly if you poll financial institution customers, they have a great reputation for customer service. They also appear to be picking up market share. Jack Henry is a great company, a well-run company and should benefit as investors move into the sector.
TWST: Where are they taking share?
Mr. Kraft: It's very difficult to take share from competitors in the core processing space, but there has been a shift from some of the smaller vendors to the larger vendors. There are probably five or six main large core processors domestically. There used to be several dozen and there are still some smaller regional processors that don't have the resources to keep up with the larger competitors. Keeping up with the latest compliance and fraud and all these things is very costly. So the industry has consolidated and there's still some continuing share that's being taken from the smaller players by the bigger players.
TWST: That will be a continuing situation then?
Mr. Kraft: I think so.