Financial technology stocks ended the week much as they began it, stalling in spite the continuing end-of-summer rally in the broader market.
The Dow Jones industrial average has risen nearly 200 points since Aug. 22, but the rally in technology issues began earlier, and some Wall Street observers said they started to see a selloff in high-tech stock issues as investors locked in profits before the Labor Day holiday.
For technology companies in the financial services business, the downward pressure is also coming from the fact that many are trading at hefty price-to-earnings ratios, even considering the normally high premiums Wall Street puts on the industry. Companies with big market capitalizations like Alltel, Electronic Data Systems, First Data Corp., First Financial Management, and Fiserv are all trading close to their 52-week highs.
Atlanta-based First Financial last week entered the bidding to acquire Western Union Financial Services and related assets from the bankruptcy proceedings of Western Union's parent, New Valley Corp..
First Financial officials said Friday that it had filed an $800 million bid for the Western Union money-transfer business, an offer that includes the assumption of the unit's unfunded pension liabilities.
Rival First Data Corp. announced Friday that it had not changed its initial bid of $660 million for the New Valley unit. First Data officials said the bid included $360 million in cash, up to $300 million in First Data stock, plus the assumption of the pension liabilities.
A third bidder, investment banker Forstmann Little, said it offered the bankruptcy court $970 million in cash for the unit.
All three bidders can revise their offers by Sept. 16.
First Financial's stock closed at $59.875 a share Friday, down $1.875 for the week.
In other news affecting First Data, Dean Witter analyst Timothy McCollum downgraded the Hackensack. N.J.-based company to "neutral" from "buy" after the company reached his $49-to-$51 price target.
The following day, First Data's board of directors authorized the company to repurchase up to two million shares of its common stock. Company officials said the repurchased shares would be held in treasury and will be available for issuance in connection with the company's proposed acquisition of Envoy Corp.'s merchant services unit.
First Data closed at $47.50 a share Friday, down $1.00 for the week.