On October 23rd, Concord EFS Inc, a processor of electronic transactions including credit card, debit card, and atm transactions, reported 3rd quarter 2003 revenue of $588 million which was up 14% over the 3rd quarter of the prior year. Net income was $93 million or 19 cents per share. The company earned 21 cents per share excluding merger related charges. For the first 9 months of 2003 revenue was up 18% over the first 9 months of 2002. Earnings per share was up 30%. 

     At the end of the 2nd quarter Concord had approximately $1.9 billion in cash and securities or $3.93 per share. They have $165 million of debt. Book value is $3.62 per share. The stock trades at 2.2 x 2003 revenues and just under 2 x 2004 expected revenues.
 
     In April 2003 First Data Corp (FDC) offered about $7 billion in stock for Concord. For each share of CE you would get .4 shares of FDC. Currently that would value each share of CE at $14.50. In September FDC was as high as $44 which would have valued each share of CE at $17.50. However last Thursday the Justice Dept. filed suit to block the merger. The stock dropped to the current price which is about the level it was at before the merger was announced. At that time the stock market was significantly lower than where it is today. CE has not taken part in the market rally of the last 7 months. Concord is a highly profitable company that trades at a discount to it's peers. Higher prices are likely for CE whether or not the merger takes place. We feel that the current uncertainty over the merger and subsequent price decline represents a good buying opportunity. Possible Buying strategy: Buy on a break above $10.80 which was Friday's high. If it drops to the low $10 range first buy it there. 

UPDATE 12/23/03- RECOMMEND SELLING POSITION. THE JUSTICE DEPARTMENT IS NO LONGER LOOKING TO BLOCK MERGER. 

SOLD 12/24/03 AT $14.38 FOR A GAIN OF 36%. DURING THE SAME TIME PERIOD THE NASDAQ AND SP500 WERE UP 6%.