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   Technology StocksMSFDC - Microsoft/First Data Corp Joint Venture

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To: D Mueller who wrote (104)1/20/1999 9:51:00 PM
From: AugustWest
   of 126
thought this should be posted here....

Hype and Reality: an Update

There is hype, and there is reality.

The electronic bill presentment and payment market is, to quote online analyst Jim Jubak, "wildly immature." As with every emerging market, some lines are not clearly drawn, no specific standard is set, and there is confusion in the marketplace.

Against this backdrop, Microsoft and First Data Corporation created MSFDC to offer electronic billing to banks and billers. In September 1998, Citibank made an equity investment in MSFDC, and the company changed its name to TransPoint. Because of Microsoft's resources, reputation and powerful public relations machine, TransPoint's formation has attracted considerable attention. Unfortunately, it has also created some false impressions.

Presented here are common misconceptions appearing in the media and elsewhere. Following each misconception are the facts.

Hype: There is no leader in the electronic bill payment and presentment market.

Reality: CheckFree has bill payment contracts with more than 350 financial institutions, Intuit – for payment for users of its Quicken“ software and Quicken.comTM Web site – and even Microsoft – for users of its personal financial management software, Money. CheckFree provides electronic payment services for more than 2.5 million home banking subscribers today.

In the emerging electronic bill presentment market, pilots for CheckFree E-Bill(sm) were completed in 1996, and the product was launched in March 1997. CheckFree E-Bill is up and running, serving customers right now. No other company has a solution working beyond the pilot stage.

CheckFree currently has contracts with more than 30 of the nation's largest billers to provide end-to-end electronic billing and payment – including AT&T, the largest billing company in the world. First Union recently became the first bank to offer its customers online bill presentment and payment of utility and local telephone bills, using CheckFree E-Bill and CheckFree bill payment processing.

Hype: "TransPoint is the first to provide a seamless, end-to-end system for delivery and payment of richly formatted bills, statements or notices." (Taken from TransPoint's initial press release, 9/14/98 and now included in every TransPoint press release boilerplate).

Reality: CheckFree has been presenting and paying bills for more than a year-and-a-half. TransPoint, by contrast, is still in the testing stage. To quote the October 26 issue of Business Week:

"In electronic billing, Microsoft's press releases boast that it will offer the world's ‘first end-to-end bill presentment service,' in spite of the fact that CheckFree Corp. in Atlanta has been offering services for nearly a year."

In its defense, TransPoint claims it can make the statement because its services are "all-electronic" and CheckFree's are not. This demonstrates TransPoint's market naivete. TransPoint can pay electronically only electronically presented bills. It cannot process payments for any other kind of bill. While CheckFree's processes are "all-electronic" for electronically presented bills – just as are TransPoint's – CheckFree offers the user the ability to pay online any bill, whether or not it is electronically presented. Offering this advantage necessitates having an infrastructure that can pay some bills through a paper process (without the user even being aware of it), so that merchants who never have the volume to justify electronic payment links can still be paid by the customer using the same online system used to pay electronically presented bills. Only CheckFree offers this service.

Hype: "Pay-anyone" capabilities equalize TransPoint to CheckFree's level.

Reality: "Pay-anyone" refers to the ability of an electronic bill payment service to pay any bill, regardless of whether the bill is presented electronically or whether the biller is set up to receive payments electronically. Since TransPoint's "pay-anyone" capability depends on Citibank's bill payment engine, a bank that uses TransPoint must share sensitive customer payment data with a major competitor. It is highly unlikely that banks will be comfortable with this scenario. Banks will be far more likely to tap the "pay-anyone" capability of a non-competitor such as CheckFree.

In addition, bill payment is a scale, high-volume, low-cost operation. It is virtually impossible for one bank, Citibank, to achieve the economies of scale that CheckFree's 350+ financial institutions will achieve. It is unlikely that TransPoint will be able to offer bill presentment and payment service more cost-efficiently than CheckFree can.

Hype: Any bill can be paid electronically. Whoever has a system to pay all bills electronically will dominate the market.

Reality: There are a number of consumer bills that cannot be paid electronically. At this time, CheckFree pays around half of its customers' bills electronically. This percentage will continue to rise in 1999 as banks and billers launch their Web-based bill presentment and payment solutions. In the meantime, for those billers that cannot accept an electronic payment, CheckFree will mail a paper-based check on the customers' behalf. This is important for several reasons, including:

a) Some every-day payments will always be paper-based. Small businesses such as lawn services, cleaners, newspaper delivery services, bakeries, and others cannot be set up to be paid electronically because they do not have electronic payments-receiving systems. A company with the ability to send payments to these small businesses or individuals is in a much better position to fill a true market need than those without this "pay-anyone" ability.

b) In the case of larger companies, there are other issues to resolve regarding electronic payments. While it is relatively easy to create electronic bills from the data stream billers currently send to print houses, many billing companies use processing systems that make it difficult to receive electronic payments.

Hype: Citibank's vast portfolio of biller clients gives the edge to TransPoint.

Reality: Most large billers have relationships with multiple financial institutions. The customers that Citibank claims are also customers of other financial institutions that are CheckFree customers. Billers are only half of the equation; TransPoint must also have the cooperation of banks. Citibank offered its payment system to other financial institutions before joining TransPoint, but managed to sign up only one, BankBoston.

TransPoint represents a Microsoft/Citibank-direct-to-consumer strategy. It makes Citibank a truly nationwide bank that can offer a broad range of financial services to consumers through the World Wide Web. This turn of events will likely spur other banks to accelerate their own Internet deployments—which is good for the electronic bill presentment and payment market overall.

Hype: With the addition of Citibank, TransPoint is the "leader" in the EBPP space.

Reality: TransPoint's continual strategy changes to emulate CheckFree's market model have more signs of a follower than a leader. Under CheckFree's model, bills are presented and paid under the brand of the customer's financial institution. Although Microsoft started with a closed, centralized model that would disintermediate banks, it has now changed its strategy and is attempting to court financial institutions, alleging its alliance with Citibank proves it is "bank-friendly." Microsoft has copied many aspects of CheckFree's model, even using CheckFree's exact terminology, including "pay-anyone," "round-trip transaction tracking," "end-to-end audit trail" and "self-service customer care." However, TransPoint has yet to duplicate CheckFree's ties to hundreds of financial institutions and thousands of billers.

Hype: Microsoft's electronic billing scheme was modified to allay fears from banks and billers.

Reality: Not quite. It is true that Microsoft was compelled to promise billing companies and banks that it would not misuse valuable consumer purchasing data. Still, under TransPoint's system, the detailed data produced by billers must be transferred to Microsoft's servers to be handled and delivered. This requirement effectively ends the billing company's direct relationship with its customers, which could be used for high-potential marketing purposes.

CheckFree E-Bill allows billers to keep their detailed billing data on their own servers. Consumers can request full details of summary bills presented by their banks, and CheckFree E-Bill seamlessly connects customers to the biller's Web site. Under this model, billers also ensure that sensitive, detailed purchasing data remains under their control, not under an aggressive, marketing-oriented company's control.

Hype: It is a matter of time before Microsoft runs away with this market.

Reality: Setting up an end-to-end electronic billing system requires patience, perseverance and time. Links must be established between banks and thousands of billers. There are no shortcuts to building a strong infrastructure. Microsoft started with the easier portion of it: presentment. Even so, after more than a year Microsoft has signed up only eight banks and 15 billers for extremely limited presentment pilots, not full-service presentment and payment. The starting dates for these pilots have been postponed several times and many have yet to be conducted.

CheckFree E-Bill is tested and proven. It is already launched or in implementation with more than 30 billers, including:

AT&T, the world's largest biller;
Florida Power and Light, representing nearly half the utility customers in Florida;
HomeSide Lending, serving 1.4 million homeowners in the United States;
Consumers Energy, the largest utility in Michigan;
Total System Services, the second largest credit card processor for banks;
Nicor Gas, serving 1.9 customers in Illinois; and
Southern California Edison, the nation's second largest investor-owned electric utility.
The list will continue to grow and will include some of the world's largest billers.

On the bill payment side, the other half of the "electronic round-trip," CheckFree's bill payment engine is already handling more than 10 million transactions per month and has the capacity to serve 30 million households. That capacity is one reason why the Integrion Financial Network, representing 18 leading financial institutions and IBM, chose CheckFree to provide electronic bill presentment and payment services. It is also why non-Integrion member Chase Manhattan, the largest bank holding company in the United States, has chosen CheckFree E-Bill for its customers.

Hype: AT&T and Just In Time Solutions are developing a competing bill presentment system.

Reality: AT&T chose CheckFree E-Bill to deliver and process online bills to its customers in June 1998. Simultaneously, AT&T and Just In Time Solutions (JITS) are exploring the software and hardware development of a bill creation platform, a market in which CheckFree does not compete. (In this case, "bill creation" refers to the process of converting the billing data stream originally destined to a paper printer into a Web-friendly format.)

Whatever system AT&T and JITS develop will utilize the CheckFree infrastructure for safe and prompt presentment and payment of electronic bills. CheckFree also gladly accepts and processes online bills created by all the technology suppliers in the market.

Hype: Third-party processors like CheckFree remove banks too much from the equation, preventing them from interacting directly with the consumer.

Reality: CheckFree's strategy is to enable financial institutions to be one-source providers of financial services – and to do so with all the convenience that electronic commerce makes possible. While CheckFree provides back-end processing, the financial institution maintains the front-end customer relationship.

Hype: Online bill presentment and payment is too costly for financial institutions and billers.

Reality: Since introducing CheckFree E-Bill in March 1997, the CheckFree pricing structure has remained the same. Financial institutions and billers are charged less than the price of a postage stamp to present bills to their customers. CheckFree also pays banks 10 percent to distribute the payments to their customers, a standard CheckFree was the first to establish and implement. Customers can receive payments free of charge and can schedule payments with the click of a button. Individual or monthly bill payment fees, set by the institution or biller, continue to be less than the price of a stamp.


1 Steve Hamm, "No Let-Up ­ And No Apologies." Business Week, Oct. 26, 1998, p. 58.

Copyright ® 1999, CheckFree Corporation. All rights reserved.

Message 7389589

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To: AugustWest who wrote (106)1/21/1999 1:16:00 PM
From: Benny Baga
   of 126
I just realized that CKFR has a higher 52 week high that FDC.

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To: Benny Baga who wrote (107)1/25/1999 2:27:00 PM
From: AugustWest
   of 126
just a little factoid I heard on CNBC.....

Llib is worth 100 billion. Give or take a couple hundred million.

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To: Benny Baga who wrote (95)2/16/1999 12:37:00 AM
From: AugustWest
   of 126
>>call the company ePay, have two shares float, a few banner adds on Yahoo, USAToday.. and go on CNBC a few times. The stock would explode.

So maybe someone heard you<g>

Any opinions?

Fed taps small firm for EFT translation software(dated 5/98)

The Federal Reserve System has hired a small but rapidly growing developer of electronic payment software, Bottomline Technologies of Portsmouth, N.H., to custom-make a piece of software that is expected to help member banks comply with the U.S. Treasury Department's Electronic Funds Transfer '99 initiative.

EFT '99 mandates that all federal payments - Social Security benefits, tax credits, and payments to companies for products and services - be made electronically.

Bottomline's software will help the Treasury Department and payee banks fulfill one aspect of EFT '99: payments for products and services which are attached to an automated clearing house file, according to Robert Allen, vice-president of the Federal Reserve Bank of Kansas City, who is chairman of the Fed's EDI (electronic data interchange) Work Group.

The Fed will distribute and help deploy the package, expected to be called FedEDI Software, to some 12,000 financial institutions who are connected to FedWire during the third and fourth quarters of this year. Fed-sponsored regional training seminars are also expected to be announced in September 1998.

Whether the payment is made via e-mail, fax, or an ASCII format, FedEDI Software is supposed to help banks and their customers make sense of exactly what the payment is for—something which is not always clear, says Bottomline's vice-president of marketing, Phil Grannan.

Big boost for tiny firm

Calling Bottomline a "surprise" winner of the Fed's contract, DuWayne Peterson of Standards Testing Assurance Corp., Pasadena, Calif., says it's clearly "a tremendous endorsement" for the company, "putting it on the map as a player, giving it a lot of running room." Peterson, who formerly held posts as chief of Security Pacific Automation Corp., and executive vice-president of operations, systems, and telecommunications for Merrill Lynch, says it makes FedEDI Software a potential "de facto standard"—and signals "a vote of confidence" for Microsoft Windows NT.

How then, did a little company, with not much more than $20 million a year in revenue, started a few years ago by Dan McGurl (ex-IBM and State Street Bank) and Jim Loomis (formerly of The Nashua Corp.), land such a deal—a sale, if not necessarily lucrative, than certainly a powerful lever for exponentially boosting its Paybase brand EFT software way beyond its installed base of 2,500 corporate and bank customers?

"Our biggest criteria was the software's technicality and functionality to translate these EDI messages," Allen says. "We wanted it to be PC-based and work on a variety of platforms" including Microsoft's DOS and Windows.

The Fed's EDI work group sent out a request for proposal to which 30 companies responded, among them the largest suppliers of EFT software. The work group then tested seven company's products, Allen says, in what he characterizes as an "exhaustive evaluation."

Was price a consideration? "Yes," Allen says. The Fed wants to be able to price FedEDI Software "extremely reasonably," helped by spreading the product's licensing fee the Fed charges "over a large base of users." No precise fee, however, has yet been determined.

Long-time coming; a lot on the line

The Electronic Funds Transfer 1999 initiative emanated from 1996 legislation which called for the federal government to accelerate its ability to make payments—and have them understood by recipients—electronically, according to Allen. But the banking industry at large is not presently well prepared to successfully use electronic data interchange over the ACH network.

"The truth of the matter is that fewer than 1,000 banks currently have the capability to pass on remittance information to corporate customers, federal agencies, and independent banking agencies," says Allen. Out of the 1,000, Chase Manhattan, Norwest, Banc One, First Union, and NationsBank account for 40% of all ACH transactions, according to data compiled by American Banker.

But there's more to the Fed's action than meets the eye. "This has been under way for 20 years—to create a checkless, electronic society," Peterson says. What's really at stake is nothing less than the viability of the U.S. banking system, he believes.

"Companies can go company-to-company and bypass banks. Meanwhile, banks want to own the payment system. The Fed wants to be above it all and say, ‘we support banks, but we want efficiency, and want money flow to be as riskless and liquid as possible,' and they [the Federal Reserve Governors] are nervous" about the banking system's ability to achieve that level of efficiency.

"Fewer than 1,000 banks can pass on remittance information to corporate customers, federal agencies, and independent banking agencies"

—Robert Allen, Federal Reserve Bank of Kansas City

By Alan Levinsohn, managing editor


"Reprinted by special permission from the May 1998 issue of ABA Banking Journal.
Copyright 1998 by the American Bankers Association."

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To: AugustWest who wrote (109)2/25/1999 8:32:00 AM
From: Benny Baga
   of 126
hmmm...........kind of quiet here.....Oh Can- na - da!,....

....well it's all the Janet Reno's fault, she is Bill Gates Evil Twin out to get him...

...Today bill gates upgrades his famous banker dinosour comment, Bill says.."Bankers are dinosour's...with blinders on".

Benny(just letting off some steam.)

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To: Benny Baga who wrote (1)3/4/1999 1:55:00 PM
From: Polly the Parrot
   of 126
That sounds good to me.

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To: Polly the Parrot who wrote (111)3/5/1999 7:55:00 AM
From: Benny Baga
   of 126
With all the Hype about Microsofts "New" e-Commerce initatives, there was no mention of TP or EBPP.



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To: Benny Baga who wrote (112)3/5/1999 8:34:00 AM
From: AugustWest
   of 126
they didn't have a square(one) to spare!

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To: AugustWest who wrote (113)3/8/1999 8:06:00 AM
From: AugustWest
   of 126
Barron's On FDC

From: Henry Niman Date: 3/6/99 Time: 5:30:35 AM Remote Name:

March 8, 1999

Barron's Features

Piece of the 'Net

First Data wants a cut of all e-commerce


First Data Corp. chief executive Ric Duques has a modest goal: Every time you pay for something without cash, he wants First Data to get paid. And as more and more transactions move through the Internet, he wants a little piece of each one as they fly through cyberspace. That's not just for the stuff that's getting sold via the 'Net these days; he's got his eye on all those paper bills that you now receive by snail mail. If First Data can get a foothold in the nascent business of "electronic bill presentment," the stock market may concentrate more on its future growth potential than its past missteps.

First Data already processes nearly one of every three credit-card transactions, or four billion transactions totaling $300 billion in 1998. The company also is a major processor of checks and owns Western Union, which has become the 800-pound gorilla of the money-transfer business.

But the company also has stumbled in the past couple of years, with a rocky merger with First Financial Management in 1995 and a few disappointments in its core card-processing businesses. As a result, the stock trades at 38, or 22 times estimated 1999 earnings. That's a significant discount to the average price-earnings multiple of 33 on the S&P 500, and a sharp contrast to the 30% premium First Data stock once commanded.

Electronic bill presentment is the first prong in Duques' plan to cash in on the 'Net and to restore the company's growth. Here's the no-nonsense pitch he gives to phone companies and anybody else that stuffs your mailbox with bills each month: Sending bills the old-fashioned way costs about $1-$1.50 apiece. Duques thinks he can do it for about 30 cents with an online bill-payment system. His product is called TransPoint, which allows customers to read their statements online, hit a button, and debit the correct amount directly from their bank accounts.

It doesn't take a supercomputer to figure out why Duques is so excited. According to Dove Associates, there are 14 billion bills mailed out every year. If electronic bill presenters charge 30 cents apiece for their service, that works out to $4.2 billion. If First Data could capture 10% of this market in five years, that works out to be an additional $420 million. Of course, this assumes that everyone that gets bills will pay them on the 'Net, which is unrealistic. Even so, what if one-half of all bill payers want to do business on the 'Net? Half of $420 million would still be a hefty fillip to revenues of $5.1 billion last year.

To get there from here, Duques enlisted a partner: Microsoft. Steve Ballmer, Bill Gates' right-hand man, was enthusiastic, he says. According to Duques, Microsoft's interest was piqued because it saw electronic bill presentment as the first "real application" for the 'Net that had mass appeal. Duques claims Microsoft is pulling out all the stops to make it a success. "They told me they put the 'A' Team on it," he says proudly. The service is being beta-tested through May, and a summer rollout is scheduled.

Once Microsoft was on board, Duques also got Citibank to take a minority interest (between 10% and 20%) in TransPoint. Notwithstanding Gates' characterization of banks a couple of years ago as technological dinosaurs, Duques says that for customers to embrace electronic billing, banks need to be involved. "You have to have an intermediary in there that the customer trusts," he says. Duques says he's also asked Gates to back off on the anti-bank rhetoric. "I got him to promise me not to make any more dinosaur comments," he laughs.

For this to work, Duques says two things have to happen right off the bat. First, he's got to sign up enough billers to give him an edge with consumers. "If I tell you that I've got a service where you can pay eight out of your 10 bills online, you'd probably say, 'Okay, I'll give it a try.' " If it's only one bill out of 10, most people would pass. First Data has at least 30 billers signed up, and 26 of those will participate in the pilot program.

The other absolute necessity: Flawless customer service. If customers have no problems with the service, or problems are taken care of immediately, the word-of-mouth from early adopters will be positive.

First Data hopes to be first to market with the new system, although Duques admits that the competition won't be far behind. CheckFree figures to be the biggest competitor, and by some accounts, it already has more billers than Transpoint. There's also been some speculation from industry types that CheckFree has been in talks with a portal company like Yahoo.

Nonetheless, Duques believes there are some fairly significant barriers to entry in this business, notably the required investment, which could keep all but the best-funded companies out. Indeed, First Data anticipates a $50-$100 million investment in the system. There's also what Duques calls the "hassle factor" of setting up this business.

The second prong of his Internet strategy involves getting retail merchants wired to the World Wide Web. The bigger a merchant's presence on the 'Net, the more transactions there are to process, usually via credit cards. "Everything, 100% of the stuff that people buy over the Internet, has to be processed electronically," he says. The implications of that elude most people, including Wall Streeters. "It's kind of like what happened to Federal Express," he says. "All of a sudden, people figured out that everything that was getting bought on the 'Net had to get delivered somehow, and that Federal Express is going to get a big chunk of that business," he says. Duques thinks First Data should get similar recognition once investors see the revenue potential of its 'Net-related business.

Another part of First Data's e-commerce strategy was to take a stake in a company called iMALL, which designs and hosts Websites for retail merchants. Duques and iMALL are using a number of tactics to get the merchants hip to e-commerce. They've developed four Websites designed to funnel more transactions their way. First, there's VirtualApp.com2, directed to businesses that already have their own Web strategy down cold and are simply looking for credit-card processing. The second is MerchantStuff.com3, which says it supplies "all the stuff you need to start selling on the Web for one low monthly price," from creating and hosting a Website for a retailer to luring traffic with links from other iMALL sites.

There also are two shopping sites, stuffmall.com4 and stuff.com5, which get you information about a product and a link to a retailer where you buy something that requires a credit-card transaction. Merchants that are on the First Data bandwagon include FAO Schwartz, Toys 'R' Us, SkyMall, OfficeMax and bedandbath.com6. If all goes according to plan, these sites should create new sources of recurring revenues for First Data.

Things are moving ahead quickly. At the beginning of last year, First Data had 4,437 merchants signed up to use its Internet services; by yearend that number grew to 21,578. Duques believes this is just the beginning. "We've got two million merchants that use our card processing services, and I think you can get 10% of any group to try something at least once," he says. Duques gets a bit cagey about specific revenue projections, however. "We don't expect to see anything, really, from this business in 1999. In 2000, we'll see something happening in the numbers and then in 2001, it's going to be significant," he says.

So far Wall Street hasn't given Duques much credit for his Internet strategy, in part because he hasn't said much about it until now. The Street also hasn't been enthralled with the mature credit-card processing business. And it didn't help that the company over-promised last year and fell short of earnings expectations.

First Data managed only meager revenue and profit growth last year, with the top line gaining less than 2%, to $5.2 billion. Net inched up to $697 million, or $1.56 per share, from $691 million or $1.51 in 1997.

Duques notes that revenues dropped off because he sold several underperforming "non-core" businesses that he got as a result of the 1995 merger with First Financial Management. In 1998, he sold off VIPS Healthcare Information Solutions and First Image Management. This followed the 1997 sale of a credit agency called Nationwide Credit. As a result of the sales, the company had to take a $232 million writedown, which is excluded from the $1.56-per-share earnings number.

"When we did the merger in 1995, we said we love Western Union and TeleCheck. At the time we hoped the other stuff would turn around, but if it didn't we were going to sell it," he says. "The way it ended up, we bought a cow for a quart of milk and then we had to shoot the cow," he says. Nonetheless, the divestitures have cleaned up the company's focus and he's ready to move forward.

Duques still faces challenges in his core credit-card business owing to consolidation in banking. Some of First Data's largest alliance partners have been merged or bought out, including NationsBank, a major account.

While the consolidation trend in banking looked like it meant the loss of even more customers, First Data allayed some of those fears last month. Not only did it manage to hold on to Bank One's business even after the Chicago-based bank merged with First Chicago NBD, it also picked up a new credit-card processing contract from First Chicago at the same time. "The announcement erases that fear while adding the cards to the conversion pipeline," wrote James Marks, a research analyst who covers the company for Deutsche Bank. First Data said 46 million Bank One card accounts will be processed in 1999, with another 22.5 million from First Chicago.

Despite this near-term win, bank consolidation could still threaten some of First Data's credit-card business. Although Duques says he's committed to maintaining his existing relationships with banks, he's thinking about new kinds of alliances. That's because banks are a great way to gain an entree with retailers. "When a merchant comes in to set up a bank account, the bank can refer them to you for their credit-card authorization needs," says Duques. But banks aren't the only ones that have an in with merchants. Payroll-processing companies come to mind. Duques won't name names, but people familiar with his plans think he's likely to approach Automatic Data Procrssing, Paychex and others that have longstanding relationships with merchants that First Data could piggyback.

At a certain level, Duques will never be able to completely disengage himself from the banking industry. After all, banks are still the ones that issue the most cards, so they're the ones that still control who gets the processing business. For banks to outsource that function to First Data, it has to process credit-card transactions more cheaply than the banks can do it themselves.

That's where Charlie Fote, president and now chief operating officer, comes in. Widely viewed as First Data's best operating executive, with the best feel for the ins and outs of the processing business, he's now focused on controlling costs. It's starting to show up in merchant processing operating margins, which came up to 29.9% last quarter.

Even if Duques' Internet plans come to naught, and Fote can't keep margins this high, Western Union is probably worth nearly as much as First Data's current stock price, according to Greg Jackson, an analyst who follows the company for Harris Associates in Chicago. The wire-transfer business doesn't sound very sexy, and in the U.S., it's not, growing only in the "mid-single digits," Jackson says.

The real gains are coming from overseas, where the business is growing at 50% or better. Part of that owes to emigres of the former Soviet bloc countries who send money back to the old country. For instance, the influx of Russian Jews to Israel brought about a doubling in Western Union's business there last year.

That kind of growth potential has spurred a major expansion program. Western Union currently has about 55,000 agent locations, half of which are outside the U.S. Duques has a target of 150,000 over the next few years, with most of the expansion outside this country.

This is not a capital-intensive business. A new location needs only a local agent and a computer system. Of course, the challenge is to navigate local banking rules and customs, and finding trustworthy agents. But this expansion should give the business 20%-plus earnings growth for years to come.

That's what gets the Harris Associates analyst excited. Jackson thinks Western Union alone is worth 14 times EBIDTA [earnings before interest, taxes, depreciation and amortization], or $11 billion, which works out to $25 a share. (For another valuation of Western Union see table.) He reckons the rest of the company is worth at least $25 a share, which gets him to a target stock price of $50.

Of course, Duques thinks there's lots more to like at First Data than just Western Union. "At the end of the day, we want to do more business than anyone on the Internet," he says. An immodest goal, indeed.

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To: AugustWest who wrote (114)3/8/1999 10:20:00 AM
From: TLindt
   of 126
>>>>First Data hopes to be first to market with the new system, although Duques admits that the competition won't be far behind. CheckFree figures to be the biggest competitor, and by some accounts, it already has more billers than Transpoint.

Simple...hopes to be first to market...on the planet Kyrpton.

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