First Data Corp. shares rose almost 20% last week despite an earnings announcement that revealed slower-than-expected growth in its merchant processing business.

Analysts and First Data officials said the rise-from Monday morning to on Friday-is a benefit of the company's diversification.

"First Data seemed more confident that it is more than just a credit card processor," said Gregory Gould, an analyst at Goldman, Sachs & Co.

In a presentation related to fourth-quarter earnings, First Data's chairman and chief executive officer, Henry "Ric" Duques, spoke of securing a share of the new wave of electronic transactions for bill payments and other financial services.

"We are talking about billions and billions of electronic transactions and information-related transactions," he said. "Our simple view is that anything you multiply by a billion is a big number."

The Hackensack, N.J., company reported income from continuing operations of $201.4 million in the fourth quarter, down from $205.9 million a year earlier.

Revenues from continuing operations for the year were $4.7 billion, compared with $3.9 billion in 1996.

In merchant processing, a card-related business that accounted for 26% of revenue in the fourth quarter, First Data saw lower-than-expected growth of 10% for the period, which included gains from sales of merchant accounts.

But the increasing contributions of other First Data units helped limit the damage such results inflicted on its stock price.

The electronic payments division-which includes the Western Union wire transfer business and MSFDC, the electronic bill processing venture with Microsoft Corp.-grew 18% in the fourth quarter, exceeding expectations. The division is now First Data's largest, accounting for 28% of revenues.

Other parts of First Data, such as card issuing, also grew faster than expected. The unit, which contributes 24% of total revenues, expanded 21% in the fourth quarter.

Many on Wall Street were pessimistic about First Data before the earnings report and bet its stock price would fall. Mr. Gould said the price jump last week was the result of investors' rushing to cover short positions.

But other factors are helping the price sustain its rise. Mark Wolfenberger, an analyst at Deutsche Morgan Grenfell, upgraded his rating of First Data to "buy."

He said First Data's push into electronic payments "basically has a limitless upside. Every consumer transaction that goes electronic is its market."

Mr. Wolfenberger said First Data's pricing has recently been highly aggressive. The company is determined not to be undersold, and banks should be "heartened" by this development, he said.

First Data is "willing to take a body blow" to build its processing volume, Mr. Wolfenberger added. "Those volumes over the long term will benefit them."

Mr. Duques said credit cards and other electronic payments represented 25% of all transactions at the point of sale and were rapidly replacing cash and checks.

These transactions will continue to grow as bill payments go electronic. "Who has the best chance to win that business?" Mr. Duques asked. "We do, and we will."

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