FDC: First Data is a Company in Transition
Large Cap Watch List member First Data (FDC) recently spun off Western Union, which formerly accounted for a good chunk of the company’s business. And trust us, their recent acquisition doesn’t have the “size” to offset Western Union. As a result of the company being in transition, it is only natural that the analysts following the stock are not as accurate as they used to be.
In last week’s earnings release, the company issued the following guidance:
For the full year 2007, First Data announced that it intends to generate earnings per share from continuing operations of $1.20-$1.26 and revenue growth in the range of 8%-10%.
Additionally, the company announced that for the first quarter of 2007 it anticipates delivering earnings per share from continuing operations in the range of $0.21-$0.23. Beyond the first quarter of 2007, First Data does not anticipate providing further quarterly earnings per share guidance.
“First Data’s goal for 2007 is to deliver revenue and earnings growth that meet or exceed our stated long-term objective of 8-10%.
The full year number is more or less in line with analyst expectations of $1.24 in EPS on the back of 7.6% revenue growth. But the quarterly EPS number is far below the $0.31 consensus estimate.
Meanwhile, the company seems a bit insecure following the sell-off that accompanied their earnings report. They announced a contract signing that for all appearances looks like it should have been a lay-up:
Importantly the new five-year agreement, effective in January 2008, will allow subscribing Cuscal customers to automatically roll over existing processing and terminal driving services and gain access to new services. The renewal will bring the partnership between Cuscal and First Data to a 25-year business milestone.
“Cuscal is our foundation client in Australia with a relationship spanning two decades,” said Peter Wright, Managing Director, First Data International, Australia and New Zealand. “We are extremely proud of our capabilities in retaining and extending this business. We believe that Cuscal’s continued confidence in our partnership is a reflection of First Data’s ability to meet the evolving needs of its clients.”
Translation: a customer they have had for 20 years signed up for another five. It would have been far more newsworthy (though less likely to have resulted in a press release) had Cuscal not renewed following such a long relationship.
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