First Data Corp., its stock lagging, has reorganized its merchant processing unit, pushing aside the division's chief architect, Roger Peirce.
Mr. Peirce retains his title as president of electronic funds services, but his responsibilities have been distributed to three other executives. Mr. Peirce's role is to oversee the transition.
First Data made a mark on the industry with merchant bank alliances, joint ventures it formed with about a dozen major banking companies. First Data does the credit card processing while the banks manage the client relationships. The ventures handle nearly a third of credit card transactions at merchant sites.
Mr. Peirce, 56, got much credit for the alliances' success and may be taking knocks for their recent woes. One sour note was the loss of the old U.S. Bancorp, which severed ties to First Data in the wake of its merger with First Bank System of Minneapolis, which uses competing processors.
Meanwhile, the company's stock price fell from $46.125 in July to $26.3125 at midday Tuesday, with First Data conceding that growth stalled in its merchant processing area. First Data will announce fourth-quarter results Thursday.
In an internal memo, Charles T. Fote, the executive vice president who took responsibility for Mr. Peirce's unit, said the reorganization was necessary to bring First Data Merchant Services "to a position of greater strength in the marketplace, with an even greater focus on our customers."
He said that in view of earnings shortfalls it was crucial to get the unit "back on track financially and operationally."
The memo said Mr. Pierce and Scott Loftesness, a deputy whom Mr. Pierce recruited from Visa, will help with the transition and "focus on product development, key client relationships, and other key initiatives, such as the year-2000 conversion."
The memo said the transition work "will be complete by June 30, 1998. At that time, their roles will be redefined."
Three executives in the division-Linda Mock, Sonny Martin, and Jim Gudmens-have submitted their resignations.
The memo said the changes were set by Dec. 17. First Data spokesman Peter Ziverts said they were announced to employees last Thursday.
Mr. Ziverts characterized the changes as an effort to "streamline the management structure to get closer to our customers and improve customer service." Another motivation was to "develop a point of sale strategy that goes across more of our businesses."
Under the new structure Robert McNamara manages First Data's biggest alliance, with Chase Manhattan Corp.; and David Stanford manages the United Merchant Services alliance with NationsBank Corp.
Eula Adams, president, merchant services and operations, has several new reports including Peter Gustafson, another of several former Visa people Mr. Peirce brought into First Data.
John Zieser is responsible for the remaining alliances and "components of alliance infrastructure," Mr. Ziverts said.
These senior executives all report to Mr. Fote, who replaced Walter Hoff as overseer of the Palo Alto, Calif., merchant services unit. Mr. Hoff, another executive vice president, remains with First Data.
Despite speculation that Mr. Peirce may leave altogether, Mr. Ziverts said First Data has "no plans to disengage" him. "He still has a key role. He is still very involved in the company."
Charles R. Burtzloff, president and chief executive officer of Cardservice International of Agoura Hills, Calif., said Mr. Peirce would likely "stick around through the transition and then retire." Mr. Burtzloff, who said Mr. Peirce is a personal friend, sold half of Cardservice to First Data last year.
Mr. Peirce was the top technology officer at Visa for 13 years before joining First Data in 1994.
Some observers said Mr. Peirce's association background-despite his earlier work at International Business Machines Corp.-might not have served him well.
"The merchant side is much more challenging from a processor's perspective than it is from an association's perspective," said Stanley Anderson, a consultant in Arvada, Colo. "Maybe Roger was pushing too hard on technological developments while not paying enough attention to the relationship side, which is really crucial to a processor."
Analysts said they were not surprised by the shuffle. "Any time a company comes in below investors' (earnings) expectations, investors expect to see some kind of shakeup," said Mark Wolfenberger of Deutsche Morgan Grenfell.
Richard K. Weingarten of Salomon Brothers said the changes were probably linked to Mr. Fote's taking over the division and wanting to bring in his own people.
Richardson M. Roberts, chairman and chief executive officer of PMT Services Inc., a Nashville-based independent service organization in the merchant field, was not concerned: "There probably won't be any direct impact or changes that we'll see or feel."
