First Data Corp., owner of Western Union and the world’s biggest processor of credit-card payments, said Chief Executive Charles Fote retired and his predecessor, Henry “Ric” Duques, returned to head the company.
Fote, 56, who took over at the beginning of 2002, stepped down for personal reasons according to a statement released by the Greenwood Village-based company.
Duques, 62, presided over First Data’s 1992 spinoff from American Express Co. and increased revenue and market capitalization sevenfold during his decade as chief executive.
Shares of the company surged 5 percent, the biggest gain in almost three years, on speculation Duques will be more successful than Fote in fixing or selling a unit that manufactures and processes credit cards for banks. The stock before today had dropped 11 percent from a record in April 2004 as the unit’s earnings decline contributed to what will probably be First Data’s first annual profit drop since 2001.
“Charlie Fote didn’t deliver in the way that some would have liked in recent quarters and on top of that was probably distracted” by the personal factors that precipitated his departure, said Scott Kessler, an equity analyst at Standard & Poor’s. “People are happy about the change in management.” Exploring Options The shares rose $2.06 to $43.70 as of 1:20 p.m. in New York Stock Exchange composite trading. It was the biggest gain since January 2003 and the highest price since October of last year.
The company earlier this month hired Morgan Stanley to explore “various options” for the company’s credit-card unit.
That business has lost some of its largest customers, including Bank of America Corp. and JPMorgan Chase & Co., which have moved card-processing in-house or given it to competitors such as Total System Services Inc.
Duques also may be more likely to boost the company’s dividend, currently paying about 0.6 percent annually, said Kessler, who rates the stock “sell.” The payout is less than half the 1.8 percent average for companies in the Standard & Poor’s 500 Index.
First Data cut the top range of its 2005 earnings forecast by 6.9 percent this year. On Nov. 9, when the forecast was cut to a range of $2.14 to $2.16 a share, the company’s stock price fell 4.6 percent, its biggest decline in more than two years.
Revenue “The challenge is to make the most of First Data’s market leadership,” Duques said in the statement. The company’s flagship Western Union business is the world’s largest processor of electronic money transfers. First Data also is the largest processor of credit-card transactions on behalf of retailers and other merchants.
Duques will become chairman on Jan. 1 and remain at the company about two years, First Data spokesman Colin Wheeler said.
First Data’s payment-services segment, which includes Western Union, had third-quarter revenue of $1.1 billion, up 12 percent from a year earlier. Revenue from merchant services, which collects and routes fees to retailers from credit-card issuers, grew 8 percent to $1.1 billion.
At the card-issuing business, revenue fell 4 percent to $594 million in the third quarter.
