IT services provider Ness Technologies Ltd. (Nasdaq: NSTC) today announced that the First International Bank of Israel (TASE: FTIN1;FTIN5) has selected Ness Technologies and SAP to establish a core banking system for mortgage management - SAP Consumer and Mortgage Loans (CML).
The bank has an option to expand implementation in the future to manage the entire loan system. Ness Technologies and the bank's IT teams will jointly establish the system. FIBI will be Israel's first bank to implement such a system.
The CML system enables establishment and business management of loan products for private and business customers. The system's workflow processes make it possible to automate the work processes connected to the loan's lifecycle, including the phases of expressing interest, proposal, loan approval, making the loan and managing its lifecycle, including correspondence, collection, and more.
"The First International Bank's selection of an SAP-based solution matches the international trend in the financial sector of preferring off-the-shelf solutions and software packages over traditional self-development, which was the accepted practice in the past," said Amnon Beck, chief executive officer of Mataf, First International Group's IT company.
Ness specializes in outsourcing and offshore, systems integration and application development, software and consulting, and quality assurance and training. The IT firm has over 8,000 employees and operates in 18 countries.
Separately, Merrill Lynch expects Ness to report revenue tomorrow that beats the IT firm's guidance of $155-158 million. The investment bank expects fourth quarter revenue to reach $159.1 million, a 21% year over year increase. Merrill attributes the upside to the acquisition this past November of FMC, which generated revenue of $25 million in 2006, and which Merrill believes will contribute $2-$3 million in the fourth quarter.
For 2008 Merrill forecasts revenue of $626.3 million, a 14% year over year increase, and GAAP earnings per share of $0.95, below the consensus estimate of GAAP earnings per share of $1.00. This estimate "may prove conservative given some non-repeating 2007 expenses". Management stated last week that it expects “a strong 2008.”
Merrill Lynch analysts Gregory Smith, Jennifer Dugan, and Susan Kuo point out that "Growing concerns that we are heading into an economic downturn" caused Merrill to tighten earnings multiples for Ness and its IT services comp group, with the average price to earnings ratio going to 12 from 13 mid-October 2008, with a somewhat "more severe" multiple compression for offshore IT services companies even though multiples remain higher on an absolute basis. The analysts note that "Though Ness’ growing backlog of signed business lends good visibility to our 2008 forecast, we still feel it is prudent to reduce our price objective from our prior $18 to our new price objective of $14, which reflects a price to earnings ratio of 15 times our earnings per share estimate for 2008."
Published by Globes [online], Israel business news - www.globes-online.com - on February 4, 2008
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