National Data Focusing on Core Business

By Block, Valerie | American Banker, March 9, 1995 | Go to article overview

National Data Focusing on Core Business


Block, Valerie, American Banker


National Data Corp. has come a long way from its inception as a credit card authorization and transaction processor, surviving a frenetic period in the 1980s when it provided services such as operator assistance for Sprint customers and telemarketing for Ginsu knives.

Since chairman and chief executive Robert A. Yellowlees took the reins 2 1/2 years ago, he streamlined operations, refocusing the company on its core businesses. With investor confidence restored, the stock price tripled.

Founded 28 years ago, National Data has recently expanded its payment systems to encompass a range of new services, including debit and procurement cards, electronic signature capture, and check guarantee through two Chicago-based companies acquired last year - Yes Check Services Inc. and Mercantile Systems Inc.

"I don't know anyone that has a broader array of products and services," said Mr. Yellowlees. "If a merchant needs payment systems, they've got one- stop shopping with us."

National Data provides transaction processing for 350,000 merchants and more than 200 bank clients worldwide. The company also plays a major role in health care payment applications and services. (See related story on page 17).

Mr. Yellowlees, 56, served on National Data's board of directors for 10 years while running his own consulting firm, Spectrum Research Group. Before that, he spent 23 years at IBM Corp. in marketing, product development, and finance.

Sporting a pink shirt, slacks, and loafers on a casual day at the office, Mr. Yellowlees said, "Markets change rapidly and businesses need to change with them."

The company has dramatically narrowed its focus since the 1980s. Greg Lewis, vice president of worldwide marketing for Verifone, a Redwood City, Calif.-based terminal manufacturer, worked for National Data through the early 1980s and described it at that time as a company with many irons in the fire.

Not only did National Data provide operator assistance for Sprint and other companies, it also staffed travel reservation centers and furnished third-party processing for petroleum credit cards.

But losing the Sprint contract in 1990 sent stock prices tumbling and revenues falling. Those who follow the company say discontinuing its communications ventures enabled National Data to refocus its position.

"Bob has figured out which two horses he wants . . . and he's in the race, whereas before we were always looking for new horses," said Mr. Lewis. "From what I hear, he's headed in the right direction."

Steven S. Birer, an analyst who follows the company for Hambrecht & Quist in San Francisco said Mr. Yellowlees had "done a nice turnaround job, which prior management teams were not able to do."

Although the company had come through a "rocky period," which included losing a shareholder lawsuit, Mr. Yellowlees "has certainly returned shareholder value in the period of time he's been there," said Mr. Birer.

The stock sold for $26.50 per share at midday Wednesday, compared with $8 in October of 1993.

Under Mr. Yellowlees, the company has invested tens of millions of dollars to upgrade its technological infrastructure. NDC's advanced computer network processes up to 250 transactions per second, worth $40 billion a year in its combined market segments, said the chairman.

Strengthening personnel and productivity "is reflected in our earnings growth," he added.

In the second quarter of fiscal 1995, ended Nov. 30, 1994, revenues increased 18% to almost $60 million and earnings jumped 36% to $3.5 million, compared with the year-earlier period. Net income increased 31% in fiscal 1994 to $11 million, compared with $8. …

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