Targeting to improve financial
In January, Fidelity National Information Services (NYSE:FIS) acquired the remaining 78% stake of mFoundry for $120 million, for a total deal of $165 million. mFoundry provides mobile-based banking solutions to more than 850 retailers and financial institutions including Bank of America, PNC Bank, and Zions Bank. Clients use the technology to support their mobile applications and NFC technology.
This acquisition helped the company to expand its footprint in newer technology where it has vast growth opportunities. The company, with this acquisition, will increase its per-user revenue by 40%, and expects the incremented per-user revenue of $100 every year. It is currently serving nearly 19 million mobile banking users and 3 million remote deposit users.
It is also expected that the global mobile banking customer base will reach 1.1 billion by 2015 from the current level of 590 million users, leading mobile payment transactions to reach $1 trillion by 2015. With the purchase of the remaining stake of mFoundry the company has generated the revenue of $6 million in the first quarter, ended in March, and expects to serve more mobile banking users to generate higher revenue in near future.
The company has also planned to reduce its interest expenses by restructuring its debt portfolio. In April, it raised $250 million of 2% senior notes due in 2018 and $1 billion notes carrying interest of 3.5% due in 2023. The net proceeds will repay the higher interest bearing callable senior note of 7.625%, amounting to $750 million due in 2017, and expenses related to it. The company will also use these funds to reduce debts and move forward with its share repurchase plan. With these steps, Fidelity National Information Services (NYSE:FIS) expects the reduction in interest expense from $229.6 million in 2012 to around $187 million this year.
Conclusion
Computer Sciences Corporation (NYSE:CSC), with its divestiture of non-core low-margin segments, is advancing towards next-generation technology, and MedChart is opening new opportunities for future growth.
Xerox Corporation (NYSE:XRX), by acquiring CVG’s Value+, has enhanced its client portfolio, and anticipates further growth in its revenue. It expects the service segment’s new deal will improve its service margins.
Fidelity National Information Services (NYSE:FIS), with the acquisition of mFoundry, plans to capture higher growth opportunities in mobile-based transactions, and is also improving its operating margins by reducing interest expenses.
Therefore, I recommend investors buy these stocks.
The article 3 IT Companies Worth Watching originally appeared on Fool.com and is written by Shweta Dubey.
Shweta Dubey has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Shweta is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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