Discover Sells Its Costly Credit Card Unit

Jonathan Stempel reports:

Discover Financial Services (DFS) said on Thursday it agreed to sell its Goldfish credit card unit in Britain to Barclays Plc (BCS) for $70 million, abandoning a money-losing business it bought two years ago for $1.68 billion, as consumer credit worsens.

Yep, that's $1.6 billion, or 96% of the original purchase price, up in smoke. In fact, Discover has lost significantly more than its original purchase price, since Goldfish has been losing money hand over fist ever since Discover bought it. And this dreadful announcement actually helped to boost Discover's shares Thursday, although they were back down Friday. Score one for Morgan Stanley (MS), which spun off Discover at $28.50 a share in June: the stock is down more than 45% since then.