DENVER (07/24/06) -- The growing controversy over illegal immigration hurt Western Union's business in the second quarter, as immigrants in the United States became less willing to send money to their families in Mexico, and could have a negative impact on plans for First Data to spin-off the business later this year, First Data executives said Friday. "We estimate that the U.S. immigration activities in the second quarter negatively impacted Western Union's total revenue growth by 2 percent and total operating profit by 3 percent," said Ric Duques, CEO of the payments giant. Efforts by lawmakers to crack down on illegal immigration have frightened both legal and illegal immigrants away from money-transfer offices, said Duques. "Most of these migrants come to the United States to find work and in many cases send money back to their family," Duques said. "The last thing these people want is to find themselves a target of controversy or suspicion. Even those in this country legally may now have concerns about their paperwork or undocumented family members." Fear of harassment and arrest are prompting many migrants to hang onto their cash, Duques said. In the second quarter First Data experienced a noticeable decline in transaction growth across all three of its money transfer brands -- Western Union, Orlandi Valuta and Vigo, Duques said Meantime, First Data reported that net income rose 11% for its second quarter to $436.4 million, or 56 cents a share, from the same period last year, fuled by a 10% rise in revenues, to $2.87 billion. Revenues for Western Union climbed 15% to $1.1 billion, while operating profit rose 9% to $352 million, for the second quarter. First Data plans to spin off Western Union and its other remittance units to its shareholders either late in the third quarter or early in the fourth quarter.
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