The Denver processor First Data Corp. said Thursday that Jim Schoedinger, the president of its card-issuing services unit, will leave the company today to pursue other interests.
Analysts differed on whether his departure might foreshadow the unit’s sale.
The announcement followed tepid revenue growth and declining operating income at the unit. Its first-half revenue rose about 4% from a year earlier, to $1.2 billion, while operating income slipped 2%, to $227.5 million.
Colin L. Wheeler, a First Data spokesman, said that Guy Battista, the chief information officer, and Tony Holzapfel, who heads enterprise customer development, will oversee the unit on an interim basis. They will review its leadership over the next 60 days, Mr. Wheeler said.
Mr. Schoedinger presided over several big losses and wins during his roughly one and a half years at the unit’s helm.
Last year Bank of America Corp. moved its newly acquired FleetBoston Financial Corp. from First Data’s processing platform to one run by Total System Services Inc. That year JPMorgan Chase & Co. also decided to shift its credit card accounts to TSYS.
But during Mr. Schoedinger’s term First Data also gained two major customers: Citigroup Inc., which hired it to process the private-label portfolio it acquired from Sears, Roebuck and Co., and Capital One Financial Corp.
Two years ago First Data considered selling the unit. Its lackluster performance since then “raises the question of whether there is a future for this division,” said David M. Scharf, an analyst at JMP Securities LLC.
“We have seen a fair amount of private equity interest expressed in slow-growing, mature, cash-flow-rich processing businesses. It might be interesting to monitor whether financial buyers might see some benefit to owning it as a stand-alone asset.”
The credit card industry’s rapid consolidation and the infrequency with which processing contracts change hands have made such businesses unlikely to grow much soon, Mr. Scharf said.
“I am not really sure where the next wave of growth would come from.”
Scott H. Kessler, the director of information technology research at Standard & Poor’s Equity Research Services, downgraded First Data’s stock last month to “sell,” from “hold.”
“I don’t think it is any big secret that the unit has struggled over the last few years,” he said. “I don’t think there is any indication that that turnaround has occurred” since First Data decided to keep it a year and a half ago.
“It is fair to say at least this has been a challenging business for the company and its managers for a number of years running.”
He said First Data has not hesitated to buy and sell companies when appropriate, but he called the card-issuing services unit more substantial than most.
“You could argue that selling that business would favorably impact revenue growth and profit margins, but only after absorbing all the one-time costs related to shuttering that business.”
