First Data Corp. used to grow reliably at 14 percent to 18 percent a year in the 1990s.
In recent years, under chief executive Charlie Fote, its growth dropped into the single digits.
And that may have doomed Fote, who took early retirement Monday at age 56.
“Fote had to reset expectations lower,” said Larry Berlin, an equity analyst with First Analysis Securities Corp. in Chicago. “When you are the CEO who has to do that, you are going to have some relationship issues with (Wall Street).”
Tensions began to surface this year after the company’s card-issuing business proved a drag on growth. Wall Street began pushing the company to sell the shrinking business line – an option the company agreed to explore only this month.
Investors gave First Data’s stock a paltry 6.2 percent return between 2002 – when Fote became CEO – and the Friday before his resignation, despite a 60 percent gain in sales and a sixfold bump in the annual dividend. That 6.2 percent gain was matched in the two days following Fote’s decision to step down, as the stock closed at $44.23 on Tuesday.
Fote has not responded to an interview request.
Berlin said this week’s run-up mostly reflects expectations that First Data will be split up. With a market capitalization of $33.8 billion, First Data is the most valuable public company in Colorado and owns Western Union, the world’s largest provider of money-transfer services. First Data employs 32,000 worldwide, including about 3,000 in Colorado.
Its relative lack of return to investors reflected the transition of First Data from a rapid grower into a solid but slower-growing corporation, spinning off cash and dividends.
Fote’s replacement, Henry “Ric” Duques, promised analysts the company would move quickly to deal with its lagging credit-card business, with more details coming in January.
Longer term, splitting off the company’s money-transfer and credit-card-processing businesses would be considered if it created shareholder value, he said.
Staff writer Aldo Svaldi can be reached at 303-820-1410 or asvaldi@denverpost.com.
