First Data falls sharply despite beating quarter estimates, reiterating 2002 guidance

By Ronda Fears

Nashville, Tenn., April 11 - Denver-based First Data Corp., parent of Western Union and TeleCheck, fell sharply Thursday after posting earnings that beat estimates and standing by its 2002 guidance. Traders did not see a great deal of volume in the converts but there was a huge sell-off in the stock that caused the converts to be marked down sharply as well.

"It could have been short covering, or what have you. Really, we don't know what was going on with First Data today," said a dealer. "The news looked positive, but the stock got beaten up badly."

First Data shares plunged $7.35 to $82.65. The 2% convertible due 2008 was marked off 5.5 points to 116.5 bid, 116.75 offered.

First Data, which provides electronic payment services, posted first quarter earnings per share from recurring operations of 65c, up 20% from first quarter 2001 pro forma EPS of 54c. After non-recurring items, reported net income was $244 million, or 63c per share, up 9% from first quarter 2001 pro forma net income of $214 million, or 53c. Revenues from recurring operations were up 8% from $1.605 billion to $1.727 billion.

Pro forma figures relate to the impact on 2001 results of the accounting rule to eliminate goodwill amortization expense. During the 2002 quarter, the company incurred non-recurring after-tax charges of $8 million, including $5 million in restructuring charges and $3 million related to write-downs of investments in technology companies.

"We are excited to deliver another solid quarter," said chief executive officer Charlie Fote, in a company statement.

"Our focus remains on operating our core businesses with discipline, making acquisitions that fit, increasing international growth and offering enterprise-wide solutions. With this discipline and focus, we remain confident in our stated guidance for the year of 14-17% revenue growth and 15-18% EPS growth."

Western Union accounted for more than 40% of revenues.

TeleCheck business continues to expand with merchants' use of electronic check acceptance, First Data said, with a growth rate of 126% in first quarter.

During the first quarter, First Data generated about $260 million in free cash flow after capital expenditures due to continued strong operating results from the three core business segments.

Chief financial officer Kim Patmore said in the company's conference call that the cash flow would be used for working capital, acquisitions and for capital structure purposes such as debt reduction and stock buybacks. She said the company is seeking approval to boost its share buyback program as well as a 2-for-1 stock split at the upcoming stockholder meeting.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.