First Data Cutting Work Force By Up to 5% in Restructuring

First Data Corp. is reducing its worldwide work force by 3% to 5% to restructure the company and increase efficiency after a period of acquisitions.

Although it did not make an announcement, First Data, Hackensack, N.J., confirmed it is eliminating 1,260 to 2,100 jobs from its 42,000-person work force. Among the units affected will be its card services division and its payment instruments group.

A First Data spokesman called the layoffs a "restructuring to realize synergies from the 1995 First Financial Management Corp. merger" and "the further elimination of redundant positions."

Analysts and consultants called the work force reduction not "huge" but "material." They said it represents the inevitable fallout for the acquisition-hungry credit card processing giant, eager to stay competitive and reduce costs.

Experts said the $6.7-billion acquisition of First Financial and its Nabanco subsidiary, as well as the acquisition of Card Establishment Services in 1994, has left First Data with operational headquarters all over the country and overlapping employees.

Industry observers said the layoffs are the result of First Data's increasing use of electronic authorization processing and stem from its emphasis on cost savings this year.

"Certainly when you put together a number of large companies, there tends to be overlap and an opportunity to eliminate people and gain synergy," said Richard Weingarten, principal of Montgomery Securities. "First Data said it would have more of a cost focus this year. It is looking at ways to be as efficient as possible and to compete as efficiently as possible."

Robert E. Hyer Jr., director of the financial institutions group at Smith Barney Inc., called the First Financial merger a "huge conversion effort."

Whereas most conversions take place within the first six months, he said, this has taken years.

He pointed out that 35% to 40% of credit card transaction volume in the United States goes through First Data. "They are finally consolidating."

Stanley Anderson, president of Anderson and Associates, Arvada, Colo., said First Data is finding ways to economize. "First Data has grown like gangbusters. Management needs to step back and see if this is efficient."

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