First Data Corp. is evaluating three internal candidates to succeed Henry C. Duques as chief executive of the Denver transaction processing giant.
During a conference call Thursday to discuss the company's earnings guidance, Mr. Duques, who is also chairman, said he expects a new top executive to be identified within nine months.
"There's a process going on now that will go through our next board meeting, which is in February," he said. "I think there will be a new CEO identified" between March and August.
Mr. Duques retook the chairman and CEO roles in late 2005 after Charles T. Fote resigned, but he said then that he would not run the company on a long-term basis.
For the current quarter, First Data expects to report earnings per share of 33 to 35 cents. For the year it expects earnings of $1.08 to $1.10, and for 2007 it expects to report EPS of $1.20 to $1.26.
First Data decided only Wednesday to host the earnings preview. Mr. Duques said discussions with shareholders and analysts after the company's September spinoff of Western Union Co. revealed "a wide variety of assumptions being used to forecast the new First Data, producing obviously a wide range of earnings estimates." He said he wanted to share some of the assumptions the company is using to forecast its 2007 earnings.
One expectation is there will probably be lower interest expenses from a lower debt in 2007, he said. That, and some other small items, will contribute 1 cent to earnings.
First Data will continue to invest in the consolidation of its international data centers. "For example, in Germany we're going to go from four data centers to two; in the U.K., we're going to go from 350 servers to 80," Mr. Duques said. Those investments will drag down earnings by about 4 cents next year.
Mr. Duques said one of First Data's goals in 2007 would be to renew contracts. The company made an early start by announcing two renewals this week, with Lloyds TSB in the United Kingdom and Advanta Corp. in Spring House, Pa.
Thomas McCrohan, an analyst with Janney Montgomery Scott, wrote in a research note that the "big question mark" remains the consolidation of First Data's domestic platforms.
"It is no surprise that management is putting international first on the list of geographies to get the systems in order, given international is the growth engine."
