EDS quits the ATM business

Electronic Data Systems Corp. is leaving the business of owning ATMs, an investment made eight years ago that the company says no longer fits.

The Plano company said Wednesday that it has sold 4,562 ATMs located in 7-Eleven stores to American Express Co. for an undisclosed sum. The deal doubles the credit card company's stable of the money machines to 9,000 in 46 states and Washington, D.C., making it the second largest ATM owner in the country after Bank of America Corp.

EDS isn't leaving the ATM business completely.

Under a new contract with American Express, EDS will provide transaction-processing and other information technology services connected to the ATMs. The agreement is worth about $200 million over five years.

"We are going to handle all the care and feeding of the machines," said Delbra Bristol, EDS spokeswoman. "This is part of our continuing effort to focus on core competencies and exit unrelated businesses."

EDS, chastened by too many years spent far from its original miss
ion, has been leaving consumer and other unrelated markets over the last year. "Business-to-business is what is central to us now," Ms. Bristol said.

EDS came by the ATMs in 1992 when it decided that putting them in unconventional locations was a good business strategy, Ms. Bristol said. The company already had a business relationship with 7-Eleven, so adding ATMs was a natural move.

At the time, prognosticators believed customers would use ATMs for any number of transactions, from retrieving cash to buying stamps and airline tickets. EDS' automated teller machines became multipurpose kiosks. And more transactions meant more fees.

In 1998, Credit Card Management, a trade publication, called EDS a leader in ATM innovation.

While the multipurpose ATM is hardly obsolete, the Internet is fast becoming a competitor for some of its offerings. American Express started a big push into ATMs and bought 2,000 of them from EDS in 1998.

Shares of EDS were off $1.69 in early after hours trading,
at $72.50.

American Express had lost $5 by after-hours, to trade around $153.84.