Headlines:
Merrill: Mexico Data Back Up First Data Hypercom OKs $10M Buyback Program Diebold: SEC Inquiry Now a Formal Probe
Merrill: Mexico Data Back Up First Data
Economic data from the Bank of Mexico appears to support First Data Corp.'s claim that its money transfer business slipped last quarter because of the U.S. controversy over illegal immigration.
Gregory Smith, an analyst with Merrill Lynch & Co. Inc., wrote in a research note published Monday that last quarter's slowdown in transfer volume growth at the Denver processor's Western Union Financial Services Inc. corresponded to a slowdown in overall remittance volume to Mexico.
Western Union's remittance volume to Mexico grew 6% in the second quarter, compared with 17% growth in the first quarter.
Henry C. Duques, First Data's chairman and chief executive, said last month that the unit's transfer volume growth slowed, especially to Mexico, because the immigration debate had created "a great sense of uncertainty among the entire migrant population in the United States." However, some analysts questioned that reason at the time, noting that some of Western Union's rivals, such as MoneyGram International Inc., reported strong growth.
But Mr. Smith wrote that data from the Bank of Mexico showed that total remittance volume into the country grew only 14% in the second quarter, versus 22% in the first quarter.
Electronic remittances to Mexico grew 17% after increasing 25% in the first quarter, but cash remittances "surged 101%" after declining 14% in the first quarter, he wrote.
"While the cash remittance category tracked by the Bank of Mexico is very small compared to electronic and even money order remittances, we think this signals that a portion of immigrants that routinely send money to Mexico may have switched from formal to informal channels," Mr. Smith wrote. "This dovetails with First Data's comments that immigration uncertainty impacted immigrant behavior."
Hypercom OKs $10M Buyback Program
Hypercom Corp.'s board approved another stock repurchase plan.
The Phoenix point of sale terminal company announced Tuesday that its board has authorized an additional $10 million of buybacks. In November the board authorized a $20 million buyback program; so far Hypercom has repurchased $179,000 of stock under that program.
Hypercom said the new program is authorized under the Securities and Exchange Commission's Rule 10b5-1, which lets a company purchase its shares at times when it might otherwise be barred from doing so, because of insider trading rules, for example, or self-imposed trading blackouts.
The new program will be in effect from today through Nov. 6, and the purchases will be tied to certain share prices, so there is no guarantee how many, if any, shares will be purchased, Hypercom said.
By midday Tuesday its shares had risen 5.48% from Monday's close, to $8.08, about halfway between its 52-week low of $5.57 and its 52-week high of $11.16.
Diebold: SEC Inquiry Now a Formal Probe
The Securities and Exchange Commission has started a formal investigation into accounting procedures at the automated teller machine company Diebold Inc.
In May the SEC began an informal inquiry into how the North Canton, Ohio, company recognizes its revenue. Diebold said Monday in an SEC filing that the inquiry "has been converted to a formal, nonpublic investigation."
Mike Jacobsen, a spokesman for Diebold, would not discuss the investigation, except to say that his company is cooperating with the SEC and does not know how long the investigation could take.
