The company breaks reports into two groups: investment support systems (ISS), which includes the Brut ECN, PowerNet, Brass, and most client-hosted software applications; and availability services, which includes the hardened data centres and networks for which SunGard has become a household name, particularly in an industry increasingly focused on business continuity after post-9/11.
ISS revenue grew 4% to $1.36 billion on the year and 2% to $362 million on the quarter; but when acquired businesses are not considered, revenue declined 2% for the year and 4% for the quarter.
Availability services’ 101% spike in revenue to $1.05 billion in 2002 looks less impressive when the combined revenue of Comdisco and Guardian IT is left out: SunGard said organic revenue was up 7% in 2002 and 4% in Q4.
SunGard officials said the company projects net income per share growth between 8% and 12% in 2003, excluding merger costs.
SunGard appears to have a strong cash position: it spent $353 million in cash on nine acquisitions in 2002 and still has $440 million left over.
But SunGard’s performance is not as immune from cyclical trends as the numbers - and management - would suggest, analysts said. They believe a continued downturn in equity markets could eventually cut into revenue increases, since a lot of its products' revenues are based on transaction flows.
"SunGard has a history of making good acquisitions," said Glen Greene of Chicago research firm ThinkEquity. "Before about 2000, it had 8–10% organic growth in ISS, and disaster recovery was in the double digits. Now, those kinds of numbers are not sustainable. ISS is tied to the brokerage and investment management end-market, which is struggling."
SunGard officials said the company typically declines comment on analysts’ opinions.
Peter Heckmann, an analyst at Stifel Nicolaus in Kansas City, believes SunGard will achieve 1% organic growth this year.