over what has been one of banking's most consistent money-making machines.

Since the Chicago-based banking company said on Aug. 25 that its 1999 earnings would fall 8% short of previous projections, First USA's monoline credit card competitors have suffered in the stock market.

Even though the likes of MBNA Corp. and Providian Financial Corp. have made no similarly dire disclosures, Wall Street appears convinced that First USA's unexpected expense levels are just a taste of things to come.

That shaking of investor confidence is the only certainty thus far, and some card industry leaders are trying to dispel the fears.

Visa U.S.A. president and chief executive officer Carl F. Pascarella said in a recent interview that the card business is "hyper-competitive . . . the most competitive I've ever seen."

First USA essentially vouches for that. The Wilmington, Del., operation, which is about as big as the longtime top card issuer, Citibank, in total receivables, attributed its problems to the intense competition as well as to cardholders' ire over certain punitive fees.

First USA said it discovered a glitch in its posting of card payments, resulting resulted in over-assessments of late fees. Many of the affected customers left.

Chairman and chief executive officer Richard W. Vague said First USA will refocus its marketing efforts, concentrating on such areas as home equity, subprime, and affinity card lending. Reading between the lines, some analysts say First USA is simply cutting back on its marketing.

"I think there are other people who are learning the same lessons as Bank One," said Ronald N. Zebeck, president and chief executive officer of Metris Cos. "I just think (Bank One) made the bigger bet."

Statistics show that the challenge of putting more cards into consumers' hands and convincing those people to accrue credit balances is more challenging than ever.

Revolving debt, the majority of which is on credit cards, has been growing at an annualized rate of 5% to 6% for the past six quarters. "Loan growth is hard to come by," said Jerry D. Craft, president and chief executive officer of Inficorp Holdings, an Atlanta-based consulting and portfolio management firm. A blip in this trend occurred in July, according to Federal Reserve statistics showing that consumer card debt rose by $5.9 billion. The 12.1% annualized increase was the largest in three years.

Most of the growth within the industry is the result of card-portfolio acquisitions, Mr. Craft said. The companies with the strongest growth, the monoline specialists, have been growing at rates between 17% and 26% for at least the past 10 quarters. Those companies Metris, Providian, First USA, Capital One Financial Corp., and MBNA -- grew 23% in each of the first two quarters this year, according to Inficorp data.

"We still expect Providian, Metris and Capital One to be the best performers," said U.S. Bancorp Piper Jaffray analyst Jeffrey K. Evanson. "But in general, we think the rest of the industry will be very challenged."

On Aug. 30, Mr. Evanson lowered his earnings estimate for Fair, Isaac & Co., the leading supplier of the credit scores that card marketers depend on to identify prospects for mail solicitations. His report said, "We are concerned that Bank One's announcement may cause other card issuers to reexamine their marketing practices" and "reduce card mailings if they believe that one of their leading competitors is pulling back," which could hurt Fair, Isaac.

Though credit card mail is still at record highs, there are indications that the industry has begun to pull back.

In the first half of this year, 1.6 billion pieces of credit card mail were sent out to consumers, compared with 1.7 billion a year earlier, according to BAIGlobal, a Tarrytown, N.Y., research company. In addition, the second-quarter response rate was 0.6%, near an all-time low, said Robert Skolnick, executive vice president of BAIGlobal. In the first quarter this year it was 1.6%.

"There are probably multiple reasons for this drop," Mr. Skolnick said, including "consumers' paying down their debt."

Fair, Isaac disagreed with Mr. Evanson's interpretation of the Bank One news.

"The underlying theme of the First USA stories is that there is more intense competition and lower profit margins, and that has been going on for six years," said Peter McCorkell, senior vice president of corporate relations at San Rafael, Calif.-based Fair, Isaac. He said the more likely scenario is that card companies would see an opportunity to gain market share if First USA cuts back on marketing.

"To say 'I'm going to sit on my current customers' is a death spiral, and I don't think anyone is going to do that, including First USA," Mr. McCorkell said.

Amor H. Towles, an analyst with the New York firm Select Equity Group, said, "It's fair to assume that there may be turmoil in the industry if the results at other banks are bad."

Mr. Evanson said card companies' profit margins will continue to be squeezed, in part because the price of credit will continue to come down. "Consumers are in a stronger position now than they have been in seven years," he said. "They are demanding to get lower-priced credit cards and credit scores are improving, given the strong job market and increased wage growth."

Mr. Zebeck said the market should not to lose sight of the "awful lot of profits people have made in this sector." Alex W. "Pete" Hart, former chief executive officer of MasterCard International Inc., said, "If the market is generally down on the card industry because of this announcement, I think it is an over-reaction."

Analysts fully expect other companies to report problems similar to those of First USA. Bank One's experience "is not an isolated incident," said Credit Suisse First Boston analyst Michael Mayo.

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