Western Union Posts 12% Drop in Q1 Earnings; Cuts Revenue Forecast

Shares of payment transfer company Western Union fell 4.5% in AH trading to $21.90 yesterday after the company posted a drop in Q1 profit on overhead and interest expenses from its spin-off from First Data Corporation. Q1 net income fell to $193.2 million ($0.25/share) from $219.8 million ($0.29/share) a year earlier. The EPS result met analyst expectations. Revenue was up 8% from a year ago to $1.13 billion. The quarterly results reflect $15 million of expenses to add staff and replace services that had been provided by First Data. International transactions rose 21%, with India showing growth of at least 90% in each of the past six quarters, according to CEO Christina Gold. The company is forecasting full-year EPS earnings of $1.07-1.11 and has lowered its 2007 revenue growth forecast to 10-11% from 11-13%.

Sources: MoneyCentral,Reuters, Forbes, Bloomberg, MarketWatch
Commentary: Oakmark Funds' Bill Nygren: Buys, Sells, Portfolio • First Data Corp. Insecure Following Western Union Spinoff • The Long Case for Western Union: Like Wiring Money Into Your Portfolio
Stocks/ETFs to watch: The Western Union Co. (WU), First Data Corp. (FDC). Competitors: Checkfree Corp. (CKFR), Moneygram International Inc. (MGI). ETFs: First Trust IPOX-100 Index (FPX)

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