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First Data Questioned on Profit Guidance
A legal settlement with Visa U.S.A. might have helped First Data Corp. avoid lowering its earnings guidance.
In its second-quarter earnings report last week, the Denver processor said the settlement announced this month in a long-running dispute over whether it can authorize and settle transactions over its own network rather than Visa's would add 3.5 cents a share to its earnings this year.
However, First Data also said its full-year guidance remained $2.35 to $2.42 a share.
Analysts said that First Data should have raised its forecast to reflect the settlement, and that by not doing so, the company has effectively lowered the top end of its guidance.
Bryan Keane, an analyst with Prudential Equity Group, pressed executives on the point during its earnings call. He said that the guidance had not changed, even though it included the one-time gain; if "we pulled out that gain," that range should fall to $2.315 to $2.385.
But Henry C. Duques, First Data's chairman and chief executive, said that the settlement would not affect the low end of the guidance. "We tried to get you off of the $2.315 by saying specifically that we felt that taking that out, excluding that, we would still be at $2.35."
Several analysts lowered their earnings estimates for First Data. John Kraft of D.A. Davidson & Co. lowered his full-year forecast by 6 cents, to $2.32 a share, "given lower Western Union margin and increase in taxes."
Gregory Smith, an analyst with Merrill Lynch & Co. Inc., lowered his estimate to a range of between $2.36 to $2.39, noting that the range was adjusted for the anticipated gain from the Visa settlement.
Robert J. Dodd, an analyst for Regions Financial Corp.'s Morgan Keegan & Co. Inc., said First Data has "effectively lowered the top end" of its guidance. "The low end of the range is still $2.35, but the top end is $2.38."
Amro Using Voice Recognition Product
ABN Amro Bank has started using biometric voice verification to authenticate some customers in the Netherlands.
A small group of the ABN Amro Holding NV unit's telephone banking customers can use the system to initiate transfers, place investment orders, and check their balances. Users recite their account numbers instead of a password, and the software examines 100 components of their speech to match it to their known patterns.
The software also uses speech interpretation to transfer customers to the appropriate department, rather than requiring them to navigate through menus.
ABN Amro Bank said last week that it had tested the system with more than 1,450 people, including three sets of twins. In addition to distinguishing among relatives, the bank also tested situations that could cause customers' voices to vary, such as having a cold. It plans to offer the system to more customers next year.
