irst Data Corp. management is on the move and so may be its card-issuing business. On Nov. 26, 2005 the company announced that Charles Fote, Chief Executive Officer and Chairman of the Board, was retiring for "personal reasons." Taking over is Fote's predecessor, Ric Duques, who served in that capacity from 1989 to 2002.

"Charlie Fote has played a major role in the development of First Data into a position of market leadership," said James D. Robinson III, Chair of the Board's Executive Committee. "The board would like to thank him for his numerous and significant contributions ... over the past 30 years."

Fote will remain Chairman until year-end and a board member until the 2006 annual meeting in May. He also will serve as a consultant for 18 months. Duques will lead First Data for two years while it searches for a successor. "The replacement of Mr. Fote has re-energized focus on the overall strategy at [First Data] and the outlook for each respective business unit," a note from equity research firm Thomas Weisel Partners LLC stated.

Fray in Card Issuing

While First Data's money transfer (Western Union), merchant acquiring and processing divisions have experienced double-digit growth, the card-issuing segment is another story.

To address a decline in card-issuing revenue, which fell 4% in the third fiscal quarter, First Data retained Morgan Stanley for a "strategic review" of the unit. In other words, it's shopping around the division.

"The business continues to dampen the growth rates of the entire company, and maximizing shareholder value over the long-term remains our top priority," Fote had said in early November, announcing the arrangement.

On Dec. 9, First Data brought back former executive David Bailis to oversee card-issuing.

Bailis, a 12-year veteran of the company, served in multiple leadership roles there, including head of First Data Resources, its card-issuing business, from 1998 to 2001. He most recently ran his own business consultancy firm.

Morgan Stanley's enlistment, coupled with Bailis' return, certainly may point to the potential sale of the lagging division. "[A sale] should alleviate a significant drag on the overall operation as slowing growth, lost contracts and depleted margins have altered the contribution from the business," the Thomas Weisel report stated.