AJ: The company did enjoy a long run of success, having grown from its start in 1997 to become the U.S.’s fifth-largest bank-card payment processor by number of transactions and the eighth-largest by transaction dollar value. They focus primarily on small and mid-size enterprises – restaurants, for example, account for 30% of the business – although they have started to service some larger national accounts. The company’s stock has been hit on two primary fronts.
First, the economic downturn and resulting cutback in consumer spending has resulted in negative same-store sales for the past five quarters, which we expect to continue through the rest of the year. Second, the company disclosed earlier this year that its computer systems had been compromised, resulting in stolen cardholder data. Because of ongoing legal issues, disclosure about the specifics of the breach and its ultimate cost has been fairly limited, which has been a big overhang on the stock.
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