Magazine article American Banker

3Q EARNINGS: First Data Loss Widens despite B of A Venture's Solid Showing

Magazine article American Banker

3Q EARNINGS: First Data Loss Widens despite B of A Venture's Solid Showing

Article excerpt

Byline: Meghan Boyer

Despite a revenue boostit attributed largely toitsjoint venture with Bank of America Corp., First Data Corp. reported a $288.9 million loss for the third quarter, 76% wider than the year-earlier loss.

Michael Capellas, the transaction processor's chairman and chief executive, said the merchantprocessing joint venture with B of A, Banc of America Merchant Services LLC, was the "primary driver" of First Data's third-quarter revenue growth.

The company's total revenue rose 13%, to $2.4 billion.Revenue growth for Banc of America Merchant Services "has been meeting or exceeding expectations," Capellas said in a conference call with analysts.

"In the quarter, we experienced some dilution, but over the mediumtolong term it will become accretive and deliver significant additional strategic benefits," Capellas said.

The joint venture, announced in late June, is First Data's largest merchantacquiring alliance. It has similar partnerships with Wells Fargo & Co. and PNC Financial Services Group Inc.

First Data, a unit of Kohlberg Kravis Roberts & Co., has experienced an increase in new business and its merchantattrition levels have been flat since it started the alliance with Bank of America, Capellas said.

But the poor economy, coupled with unfavorable foreign exchange rates and merchant credit losseshave all stung First Data.

"The effect of the weak economy and constrained credit continued to weigh on our results," Capellas said. …

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