Payment servicer and transaction processor First Data (NYSE:FDC) just completed its first independent quarter after jettisoning the well-known Western Union (NYSE:WU) money-transfer franchise into its own publicly traded entity. So far, so good?

Well, not according to the stock price. Shares of First Data fell nearly 5% yesterday after it reported fourth-quarter and year-end 2006 results. More myopic investors didn't appreciate the lower first-quarter 2007 guidance, while others focused on lower financial-institution service sales for the year.

First Data didn't release a full cash flow statement or balance sheet, but it did detail that free cash flow came in at $1.1 billion for 2006. Based on end-of-year diluted shares outstanding, that represents free cash flow per share of $1.42, or a decent free cash flow yield of almost 6%.

In other words, First Data continues to generate prodigious amounts of cash. It plans on returning that cash to shareholders in the forms of dividends and share buybacks (it intends to buy back $500 million in shares for 2007) while also maintaining an active acquisition strategy, as witnessed by yesterday's purchase of Size Technologies. Management also detailed that it paid down more than $1 billion in debt during 2006 and ended the year with $2.5 billion in debt and $1.2 billion in cash.

Value investors like Philip Durell at Motley Fool Inside Value are well aware of the company's ability to churn out cash. What is more uncertain is how it will fare in growing the top line now that the faster-growing Western Union has been spun off into an independent firm. First Data management is guiding for 8%-10% revenue growth for 2007 and also expects $1.20-$1.26 in earnings per share from continuing operations.

Time will tell if dividing First Data and Western Union turns out to be a prudent move that allows each company to grow faster and become more profitable on its own. Global Payments (NYSE:GPN) is a smaller competitor that maintains its payment servicing and money transfer businesses under one umbrella, while MoneyGram (NYSE:MGI) is a purer money transfer play. It will be interesting to track how each performs going forward, and whether First Data succeeds in seizing the opportunity to refocus on the transaction front.

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Fool contributor Ryan Fuhrmann has no financial interest in any company mentioned. Feel free to email him with feedback or to discuss any companies mentioned further. The Fool has an ironclad disclosure policy.