Immigration Debate To Impact WesternUnion Spin-Off
DENVER - (07/24/06) The growing controversy overillegal immigration hurt Western Union's business in the secondquarter, as immigrants in the United States became less willing tosend money to their families in Mexico, and could have a negativeimpact on plans for First Data to spin-off the business later thisyear, First Data executives said Friday. We estimate thatthe U.S. immigration activities in the second quarter negativelyimpacted Western Union's total revenue growth by 2% and totaloperating profit by 3%, said Ric Duques, CEO of the paymentsgiant. Efforts by lawmakers to crack down on illegal immigrationhave frightened both legal and illegal immigrants away frommoney-transfer offices, said Duques. Most of these migrants come tothe United States to find work and in many cases send money back totheir family, Duques said. The last thing these people want is tofind themselves a target of controversy or suspicion. Even those inthis country legally may now have concerns about their paperwork orundocumented family members. Fear of harassment and arrest areprompting many migrants to hang onto their cash, Duques said. Inthe second quarter First Data experienced a noticeable decline intransaction growth across all three of its money transferbrandsWestern Union, Orlandi Valuta and Vigo, Duques saidMeantime, First Data reported that net income rose 11% for itssecond quarter to $436.4 million, or 56 cents a share, from thesame period last year, fueled by a 10% rise in revenues, to $2.87billion. Revenues for Western Union climbed 15% to $1.1 billion,while operating profit rose 9% to $352 million, for the secondquarter. First Data plans to spin off Western Union and its otherremittance units to its shareholders either late in the thirdquarter or early in the fourth quarter.