January 20, 2010
-
News: TSYS Stumbles Under CC Defaults
Consumers have significantly reduced credit card spending over the past year in an effort to escape burdensome penalties and rising interest rates. Although the effects have been positive for cardholders, credit card companies and related payment processing companies have suffered. The latest casualty, Total System Services, Inc. (TSYS), announced on Wednesday that it will reduce personnel by approximately 5 percent. Phil Tomlinson, Chairman and Chief Executive Officer, made the announcement that will take place over the next four weeks. Nearly 400 employees will be affected by the lay-off and will be given severance packages. TSYS is the second largest credit card payment processor in the U.S. and attributes the lay-off to a sharp drop in earnings.
Tomlinson said he will be notifying all the effected personnel via email this week. The renown credit card processor is based out of Columbus, Georgia home of nearly 4,500 of its 7,600 $employees worldwide. The company expects the cut to affect approximately 400 employees; however, Tomlinson did not say how many would from the Columbus office. Despite the continued forecasts that consumers will maintain the downward trend of reducing credit card spending, TSYS expects to expand its global operations to remain competitive. To accomplish their goals, Tomlinson said the company would remain on track in reducing costs which include personnel cuts.
TSYS's fourth quarter earnings fell by 9 percent from same time last year and the company's difficulties are expected to continue through 2010 with an anticipated drop in earnings of more than 14 percent. It could be the biggest drop in earnings since the company began in 1959 as a division of the Columbus Bank & Trust Co. processing credit card payments. However, fourth quarter revenue was up a half percent from same time last year. The company explains its earnings loss from rising card defaults, bank failures, and poor performing portfolio sales. TSYS is traded on the New York Stock Exchange under the symbol “TSS”.