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Despite a boost in revenue driven primarily by its joint venture with Bank of America Corp., First Data Corp. today reported a $288.9 million net loss for the third quarter ended Sept. 30, a more than $120 million increase from the $164.4 million loss the transaction processor reported for the same period last year. Revenue totaled $2.44 billion, up 13% from $2.16 billion. First Data and BofA's merchant-processing joint venture, known as Banc of America Merchant Services LLC, is the "primary driver" for First Data's third-quarter revenue growth, Michael Capellas, First Data chairman and CEO, said during a conference call with analysts this morning. The joint venture, announced in late June (CardLine, 6/29), is First Data's largest merchant-acquiring alliance. Overall, "the effect of the weak economy and constrained credit continued to weigh on our results," said Capellas. An after-tax interest expense of $283 million contributed to the third-quarter net loss. By segment, revenue for the Retail and Alliance Services division, which includes credit, debit, check, stored-value and loyalty card processing services, declined 4.4%, to $796.7 million from $833 million. The weak economy "more than offset" transaction growth of 15% and roughly 134,000 U.S. merchant locations added during the third quarter, Pat Shannon, First Data executive vice president and chief financial officer, noted to analysts during the conference call. "We continue to see declines in average ticket, shifts from credit to debit and lower interest income on a year-over-year basis," he said. Third-quarter revenue for the Financial Services division, which includes issuer card services and processing, declined 10.8%, to $339.3 million from $380.3 million during the same quarter last year. First Data's International division experienced a 10.3% drop in revenue, to $414.6 million from $462.3 million.
