Duques: Western Union Spinoff on Track
chron.com
By SANDY SHORE AP Business Writer
2006 The Associated Press
April 21, 2006, 3:13PM
DENVER — "Western Union, a global money-transfer business that began as a telegraph company in the 1800s, is expected to become an independent Denver-based company by late fall, the chief executive of its parent said Friday.
First Data Corp. also is working to finalize debt ratings for the new company once the tax-free spinoff is completed, First Data Chief Executive Officer Ric Duques said.
"While the final debt allocation decision has not been made, we are targeting strong investment-grade ratings for both companies, especially those for First Data," he told analysts during a conference call.
The parent company also will remain in metropolitan Denver at its headquarters in suburban Greenwood Village.
Duques provided the update one day after the financial transaction processing company posted first-quarter net income of $373.7 million, or 48 cents per share, compared with $374.5 million, or 47 cents per share, in the previous first quarter. Revenue totaled $2.7 billion, up from $2.47 billion in the 2005 quarter.
The latest results included a $15 million charge related to the settlement of a patent lawsuit.
Analysts surveyed by Thomson Financial had predicted earnings of 49 cents per share.
Raymond James & Associates analyst Wayne Johnson called the results a good start as the company tries to turn itself around. "First-quarter '06 results were solid, and the company delivered on what they had promised," he said. "The transparency and the quality of the numbers is much improved compared to the last few years."
Johnson said the spinoff of Western Union would help shareholders. "The idea of the spinoff is to maximize the value of Western Union today to pay back shareholders for their patience several years ago," he said.
First Data on Thursday also forecast a second-quarter profit between 52 cents and 55 cents per share from continuing operations. Analysts have predicted earnings of 58 cents a share for that quarter.
First Data's stock dipped 87 cents, or 1.8 percent, to $47.57 a share in afternoon trading on the New York Stock Exchange as investors appeared to be disappointed that the company's second-quarter guidance was below Wall Street estimates, Johnson said. In the past 52 weeks, the stock has traded between $48.77 a share and $36.50 a share.
First Data announced in January it would spin off Western Union. The move is expected to create efficiencies by allowing Western Union to focus on consumers while First Data focuses on businesses, the company has said."
On the Net: firstdata.com |
