Analysts are concerned that First Data Corp., the largest third-party processor of card transactions in the United States, is not going to meet its long-term revenue targets.

An early warning sign, they say, was the company’s announcement Wednesday that its First Data Resources is eliminating 1,005 jobs — 280 in the United States and 725 in its European headquarters at Basildon, U.K.

“The perception on the street is that First Data Corp. may have sped up these layoffs because maybe things are not as good as people initially thought in the card issuer services businesses,” said Jon Arfstrom, a research analyst at Dain Rauscher Wessels. “There has been a lot of concern in the business as to whether they can hit their revenue targets for card issuer services for 2001.”

Recent financial institution consolidation, in which some of First Data’s clients were swallowed up, is contributing to the lowered expectations.

David Togut, a Morgan Stanley Dean Witter analyst, said in a report Sept. 8 that recent acquisitions could limit the company’s revenue growth potential in 2001, because the acquired companies may be forced to use the card issuer services of their acquirers.

MBNA Corp. recently made a deal to buy First Union Corp.’s credit card portfolio and Citigroup Inc. last month announced an agreement to buy Associates First Capital. First Union and Associates are both “significant customers” of First Data’s card issuer services business, the report said.

Ric Duques, chief executive officer of Atlanta-based First Data Corp., said consolidation is a “mixed bag.” Sometimes First Data benefits.

“Many consolidations early on were a big positive,” he said. “When Chase and Chemical went together, Chase was in-house and Chemical was with us — we wound up with the business.”

Mr. Duques would not discuss any current deals under negotiation with banks.

Despite consolidation, First Data has been adding accounts particularly as the mix of cards shifts to debit and retail cards, rather than bank cards, Mr. Duques said.

By the end of 2001, First Data expects to have close to 400 million card accounts, up from 210 million in the beginning of 1999.

In his report, Mr. Togut lowered his investment rating for First Data to outperform from strong buy, and cut his price target on the stock from $70 to $52. He predicted that the company’s revenue growth for 2001 may increase 11% to 13%, below management’s target range of 13% to 16%.

The same day Mr. Togut issued his report, First Data reiterated its 2000 and long-term revenue and earnings outlook, stating that it expects to achieve revenue growth in the range of 13% to 17% for 2000.

Despite that assertion, First Data shares declined 14%, to $37.625 on the day the report was issued. The stock closed at $39 Friday, down 3.8% for the week.

Mr. Duques said he stands behind the company’s earlier estimates. “Two weeks ago we made an official statement and that’s what is out there,” he said. “We haven’t changed. The analysts can say what they want.”

Of the 280 job cuts in the United States, 240 are “management or professional” jobs. In Omaha, 150 jobs were cut and 130 eliminated positions were spread among 10 other cities. Half of the laid-off employees worked their last day on Wednesday, while the other half will be phased out over the next nine months.

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