Tuesday, 30 September 2008

Misys - still a business of three halves

Misys CEO Mike Lawrie gave his usual confident performance on this morning’s analyst call giving, as ever, straight answers to straight questions – this always goes down well. It’s been the case for a while now that Misys is a ‘business of three halves’, with each piece reacting differently to prevailing market conditions.

The core Banking business (headed since Jan. ’07 by respected ex-Logica exec Guy Warren) may find it difficult to maintain the 28% new licence revenue growth with order intake falling 7%. However, Lawrie announced a second order for its new flagship universal banking product, BankFusion, due to come on-stream late this year or early next. He said Misys is deliberately constricting the BankFusion backlog to make sure that its implementation services capability remains in sync (yes, that can be interpreted differently). The Treasury & Capital markets (TCM) business showed the reverse trend, with new licence revenues down 12% but orders up 12%. Lawrie made the point that Misys has very little exposure to Lehman’s (except, of course, for the Allscripts merger funding problem, now resolved) or indeed Citicorp and Wachovia, being more focused on Tier 2 banks.

The Healthcare business is a different kettle of fish. Lawrie mainly ascribed the pretty dreadful performance (flat total revenues, new licence revenues down 21%, orders down 7%) to uncertainties on the proposed Allscripts merger, along with an also recently resolved tiff with iMedica, the source of its MiWay on-premise and hosted low-end practice management offering. Why is it that whenever I think of this merger, phrases involving silk purses and sows’ ears spring to mind? The US healthcare IT market is fearfully ferocious (just ask Sage!) and it’s hard to see how a patchwork quilt ‘solution’ is going to hit the target. But to give Lawrie his due, with his credentials, if he can’t do it, I don’t think anyone else can.

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