Fidelity National Information Services Reports Weak Q4, Will Spin Off Acquiring Operations

Fidelity National Information Services reported a disappointing end to a disappointing year. As result of the company’s difficulties, management has decided to spin off the WorldPay business. The short- and long-term outlooks for WorldPay appear to be much weaker than we had anticipated, but we question whether current management is mistaking poor execution for a poor strategy and throwing out the baby with the bathwater. With the fundamental picture now dramatically changed, we expect to reduce our fair value estimate to $83 from $128. We will maintain our narrow moat rating.