First Data Corp.’s merchant-services division said Thursday it will fire 10 percent of its staff, or 500 people, as the company reduces costs to boost performance.
Englewood-based First Data Merchant Services said the move will help lower the price that merchants pay per charge transaction. The unit processes mostly retail-store charge-card transactions.
“They’ve obviously found things they thought they can cut out without compromising customer service,” said Franco Turinelli, an analyst at William Blair & Co. “But I wonder what those 500 people were doing yesterday.”
He estimates the job cuts will save First Data between $7.5 million and $10 million.
First Data Corp., of Hackensack, N.J., reported its fourth-quarter profit from operations fell 2 percent as growth slowed in the merchant-services division in the second half of 1997. The company reduced its annual growth estimates from 20 percent to between 13 percent and 16 percent.
“Our emphasis has been on identifying ways to streamline and combine work processes and eliminate any resulting duplication,” Charles T. Fote, executive vice president, said in a statement.
First Data said expenses from the job cuts will be offset by a gain on the recent sale of its transportation-services unit.
