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WIKI ANALYSIS
DST Systems (NYSE:DST) manages records and handles bulk communication tasks for clients in the insurance, finance, and healthcare industries. DST operates in two segments: Financial Services and Output Solutions, which accounted, respectively, for 67% and 33% of operating revenues in 2007.[1] One of DST's strongest areas is in the mutual fund processing market, where it essentially acts a the liaison between mutual funds and their investors, providing everything from investor relations services to disbursing dividend payments to investors. In 2007, mutual fund-related revenues accounted for 45.7% of DST's $2.3 billion in total revenues.[2] DST's operations are spread throughout Australia, Brazil, Canada, Hong Kong, New Zealand, Singapore, South Africa, Thailand, the United Kingdom, and the U.S., with the U.S. generating nearly 90% of its total revenue.
Business
DST currently operates through two principal segments - Financial Services and Output Solutions. In addition, DST's investments in equity securities and other financial interests, along with its real estate subsidiaries, constitute the Investments and Other segment (3.7% of operating revenue and 7.5% of operating income in fiscal 2007). This includes approximately 11.3 million shares of State Street Corporation, 29.6 million shares of Computershare, and 1.9 million shares of Euronet Worldwide, Inc., with a market value of approximately $1.4 billion as of September 30, 2007.
Below is just a sample of some of their service offerings for the financial and healthcare industries (their main customers):
- Business Process Management
- Business Process Outsourcing
- Annuity and Mail processing for the Insurance Industry
- Integrated print and electronic communications solutions
- International Asset Management and & Portfolio Accounting
- U.S. Mutual Fund Shareholder Recordkeeping
The Financial Services segment (66.9% of operating revenue and 83.4% of operating income) offers information processing and computer software services to mutual funds, investment managers, corporations, insurance companies, banks, brokers, and financial planners. Its software systems primarily provide account record keeping services and accounting for mutual funds. This segment currently includes Health Plans Solutions acquired from CSC (now known as DST Health Solutions) in April 2005 and Amisys Synertech, Inc. (now merged with DST Health Solutions) acquired in October 2006. The Financial Services segment included EquiServe, DST's wholly-owned subsidiary, until June 17, 2005, at which time EquiServe was sold to Computershare. Prior to the sale, EquiServe was one of the nation's largest corporate shareholder service providers, maintaining and servicing the records of 18 million registered shareholder accounts for more than 1,200 publicly traded companies and closed-end funds.
This segment also included the lock/line business, which was merged with a privately-held company Asurion. In July 2007, DST cut its Asurion stake from 37.4% of the combined firm by selling all but 6% of its stake to certain private equity firms and will no longer account for its investment in Asurion under the equity method of accounting. Lock/line business provided administrative services to support insurance programs for wireless communication devices, extended warranty programs for landline telephone and consumer equipment, and event-based debt protection programs.
DST is the largest provider of customized services for wireless equipment replacement programs in the U.S. The Financial Services segment derives part of its income from its pro rata share in the earnings (losses) of certain unconsolidated affiliates, primarily BFDS, IFDS U.K., IFDS Canada, Asurion, and Argus.
The Output Solutions segment (32.7% of operating revenue and 9.1% operating income) offers customizable bill and statement processing services. The company offers these services in connection with other products/services provided in its Financial Services segment.
References
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