Nagged by problems in its core processing businesses, First Data Corp. has elevated Charles T. Fote to president and chief operating officer.
For the last six months, Mr. Fote led First Data Merchant Services, where he reduced the staff by 10%.
In his newly created post, reporting to chairman and chief executive officer Henry C. "Ric" Duques, Mr. Fote is expected to pursue further streamlining.
Mr. Fote's promotion was announced late last Thursday along with a lowering of earnings estimates and the announcement of a $500 million stock buyback.
The leading bank card processor has seen its share price decline as it has had to digest numerous acquisitions and adjust to consolidation in the credit card industry.
"They weren't prepared-operationally speaking-to weather any market issues such as pricing pressure," said Mark Wolfenberger, director of global information technology services at Credit Suisse First Boston in New York. "Now they have to address those things simultaneously."
Much of the turnaround responsibility falls on Mr. Fote, 49, who joined First Data Resources in 1975 and has been credited with the successful expansion of its Western Union division. Mr. Fote ran that unit before taking over merchant services from Roger Peirce, who thereafter became chairman and CEO of U.S. Wireless Data Inc. in Emeryville, Calif.
Mr. Fote's task will be "to break down the silos and walls and run things as a whole company," said Mr. Duques.
In a conference call Friday with investors and analysts, Mr. Duques said further "restructuring is possible in the future."
Eula Adams, 48, was put in Mr. Fote's former position as executive vice president of merchant services and member of First Data's executive committee. He had been overseeing Western Union and Teleservices.
Along with the management changes, Hackensack, N.J.-based First Data said 1998 earnings would be $1.55 to $1.60 a share, 5 cents lower than previously projected.
First Data chief financial officer Lee Adrean said a general economic slowdown, which affects consumer spending, is to blame for some of the woes. The company is confident earnings will increase in 1999, he said.
Analysts said First Data's is taking its boldest remedial steps, but there is concern they are "a little late."
"First Data doesn't have time to waste-they have to get lean and mean," Mr. Wolfenberger said. "There should be some buoyancy to the stock, given the new announcements."
The long-term outlook will depend on the type of restructuring, said Paul Martaus, president of Martaus & Associates, a merchant processing consulting firm in Clearwater, Fla.
Mr. Fote "knows how businesses run and what they need in order to be profitable," Mr. Martaus said.
