Certegy lowers earnings guidance

ALPHARETTA, Ga. -- Citing a slowdown in the original plans for deploying 7-Eleven's Vcom check-cashing kiosk project among the reasons, check-cashing service provider Certegy Inc., (NYSE:CEY) announced on Sept. 20 that it would lower its revenue estimates for 2002 and 2003 by $77.7 million.

Certegy said its check-cashing division would generate $1 million less revenue than previously anticipated in the third quarter of fiscal year 2002, $5.5 million in the fourth quarter, and $6 million for fiscal year 2003. The biggest hit in revenue will come in the company's Brazilian card market division, which will generate $40 million less revenue than previously announced in 2003.

In terms of diluted earnings per share, Certegy announced that third-quarter earnings would come in at 40 cents per share, down one cent from previous guidance. Further guidance drops of 3 cents in the fourth quarter and 11 cents in 2003 are also anticipated.

In Certegy's original guidance for fiscal year 2002, the company expected to generate $15 million in revenue from 7-Eleven's Vcom project. But that was based on 7-Eleven installing 2,000 Vcom units by the end of the year.

The convenience store retailer announced in mid-summer that it would deploy about 1,000 kiosks by early 2003. Certegy anticipates 200 to 300 kiosks going into service by the end of the year, with another 1,000 to 1,200 Vcoms in place by the end of 2003.

"We anticipate revenue from our current customer base to grow from approximately $3 million in 2002 to $15 million in 2003 and reach full run rate potential of $35 million by the end of 2004," the company said in a Sept. 20 statement.

The company also announced that an anticipated national roll-out of a check-cashing program with an unnamed discount retailer has been delayed from the end of this year until mid-2003, further impacting revenue.

"While we are disappointed by these recent developments and the impact on 2002 and 2003 guidance, we remain confident that our competitive positions and capabilities are very strong," Lee Kennedy, Certegy chairman and chief executive officer, said in the company's statement.