Western Union Shares Fall on ‘Disappointing’ Outlook

Western Union Co., the world’s biggest money-transfer business, plunged as much as 11 percent, the most in more than a year, after the company said quarterly profit fell and forecast little or no revenue growth for 2010.

Fourth-quarter net income declined 6.6 percent to $223.7 million from $239.6 million, in the same period a year earlier, the company said in a statement.

Western Union, which cut U.S. transaction fees in the fourth-quarter to reverse a slump in domestic sales, said revenue this year may range from growth of 2 percent to a 1 percent decline.

Chief Executive Officer Christina Gold said transactions climbed in the fourth quarter after she implemented uniform pricing for U.S.-originated transactions and offered holiday promotions including a $5 fee for money transfers of up to $50. “We saw a tremendous pickup after having many quarters of negative growth,” Gold said.

Consumer-to-consumer transactions rose 5 percent to 51.4 million in the fourth quarter, compared with the same period a year earlier. Global business payments declined 4 percent to 99.3 million.

Sales increased in Europe, Asia, Africa and the Middle East. Revenue from consumer-to-consumer payments between the U.S. and Mexico fell as 10 percent U.S. unemployment limited the ability of migrant workers to send money home.

Total revenue for the quarter climbed 2 percent to $1.3 billion, compared with the same period in 2008, the statement said. For the full year, revenue declined 4 percent to $5.1 billion. Expenses rose 4 percent in the fourth quarter to $995.4 million, driven by costs associated with the company’s Sept. 1 purchase of Custom House Ltd., a provider of business-to- business international payment solutions.

IAMTN: WU’s performance actually reflects a stronger performance than the World Bank indicators. However, they also show how tough it is out there and how competition and market pressures mean that it is a tricky business. One wonders how some other, non-quoted businesses are faring. It is also fair to say that perhaps some analysts had an overinflated view of a recovery in the market.