Message from MoneyGram

Attractive Business Model

Despite all this, MoneyGram had no layoffs as of early May. The company is selling off parts of its payment systems business, which means it will need fewer employees in that unit. But CFO Dave Parrin says, “I don’t contemplate any broad-based layoffs in the Twin Cities.”

In an interview, Parrin and COO Tony Ryan argued that the company retained key business partners around the world throughout its difficulties. Buoyed by an ultimate injection of $1.6 billion in new capital, it is well-positioned to continue its growth, the executives believe. “We’ve had a very resilient organization,” Ryan says. “We’ve got a great business model.”

Parrin says the company had to raise more capital once it became clear that investors didn’t want any exposure to its asset-backed securities: “I believe that what ultimately made the company an attraction to Lee and Goldman is that we have a growth business.”

What lessons arise from this unhappy experience? “That is a great question,” Parrin says. He admits that the company could have looked harder at the risks of investing in certain kinds of securities.

Robert Napoli, a research analyst with Minneapolis-based Piper Jaffray, says he’ll likely keep following the stock because the company’s core business still looks strong. Napoli notes that MoneyGram is not alone in failing to see the subprime storm coming, but that doesn’t excuse their lack of judgment. “A lot of people should have seen it,” he says, adding that if management could do it over, it would have been more conservative in its investment decisions.

Or as Parrin himself puts it, “I don’t think anybody at MoneyGram would deny that we own our problem.”